Interim Results
Northgate PLC
09 January 2007
9 January 2007
NORTHGATE PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 OCTOBER 2006
Northgate plc ('Northgate', the 'Company' or the 'Group'), the UK and Spain's
leading specialist in light commercial vehicle hire, announces its interim
results for the half-year ended 31 October 2006.
Highlights:
•Group revenue increased by 48% to £262.1m (2005 - £176.9m).
•Profit before tax up by 34% to £37.8m (2005 - £28.3m).
•Underlying profit before tax* up by 38% to £39.7m (2005 - £28.7m).
•Adjusted earnings per share* up by 25% to 39.1p (2005 - 31.3p).
•Interim dividend increased by 11% to 10.0p (2005 - 9.0p).
•Excellent contributions from recent acquisitions - Arriva Vehicle Rental
in the UK and Record Rent in Spain.
•Successful restructuring of the UK business.
•Fleet size of 65,300 vehicles in the UK and 51,000 vehicles in Spain.
•Utilisation of 91% in UK and 90% in Spain.
*Stated before amortisation of intangible assets
Philip Rogerson, Chairman, commented: 'Trading in both the UK and Spain is in
line with expectations and the Board remains confident of a satisfactory outcome
for the full financial year. Northgate continues to retain its leading positions
in commercial vehicle rental in both the UK and Spain and as a result is
confident of maintaining growing returns for shareholders.'
Full statement and results attached.
For further information, please contact:
Northgate plc 01325 467558
Steve Smith, Chief Executive
Gerard Murray, Finance Director
Hogarth Partnership Limited 020 7357 9477
Andrew Jaques
Barnaby Fry
Charlie Field
Notes to Editors:
Northgate plc rents light commercial vehicles and sells a range of fleet
products to businesses via a network of hire companies in the UK, Republic of
Ireland and Spain. Its flexible vehicle products offer businesses a one stop
solution for all of their commercial vehicle requirements.
Further information regarding Northgate plc can be found on the Company's
website:
http://www.northgateplc.com
Chairman's Statement
In the six months to 31 October 2006, the Group continued to execute the key
elements of its three year Strategic Plan, announced in January 2006, and aimed
at maintaining annual double-digit earnings growth.
In the UK the Strategic Plan envisaged utilising the capacity in the Group's
network to increase the fleet by both selective acquisitions, in what is still a
fragmented market, and through organic growth. At the same time the introduction
of fleet management products was aimed at enhancing returns.
The acquisition of Arriva Vehicle Rental ('AVR') on 3 February 2006 was in line
with this stated strategy. The integration of AVR was completed at the beginning
of this financial year enabling a restructuring of the UK business to commence.
This restructuring, which is now complete, has created a functional, rather than
geographic, management structure for the business. As well as improving
productivity, as evidenced by higher utilisation in the period, it leaves us
better able to deliver improved and consistent customer service.
In May 2006 the Group successfully concluded the purchase of the remaining 51%
of Record Rent a Car S.A. ('Record' or 'Record Rent') thus strengthening its
leading position in the growing Spanish vehicle rental market. Demand for our
product in Spain continues to be strong and we remain confident of achieving the
15% annual fleet growth targeted in our Strategic Plan. Having now appointed a
single management team we expect to make further progress in integrating the
operations of our two Spanish businesses in the second half of the financial
year.
The Group's financial results for the six months to 31 October 2006 are
summarised as follows:
• Vehicle rental and associated revenue up by 48% to £262.1m (2005 - £176.9m);
• Underlying profit before tax* up by 38% to £39.7m (2005 - £28.7m); and
• Adjusted earnings per share* up by 25% to 39.1p (2005 - 31.3p).
*Stated before amortisation of intangible assets.
The Board has declared an 11% increase in the interim dividend to 10p per share
(2005 - 9p) indicating its confidence in the Group's future prospects. This
dividend is payable on 8 February 2007 to shareholders on the register at the
close of business on 19 January 2007.
As announced on 14 November 2006, Martin Ballinger retired from the Board due to
ill health. His personal contribution to the success of the business was
significant and my colleagues and I wish to express our warmest thanks to him. I
have assumed the Chairmanship of the Group on a temporary basis until such time
as a successor is appointed.
Results
UK revenue increased by 23.9% reflecting the strategic acquisitions of Fleet
Technique Limited ('FTL') and AVR coupled with organic growth represented by an
increase of 3.4% in vehicles on hire. The UK fleet size, as at 31 October 2006,
was 65,300 vehicles (2005 - 52,400). Margins have improved as a consequence of
obtaining operational gearing benefits from integrating the AVR fleet, achieving
utilisation of 91% and as a result of residual values being better than the
prior period. These benefits have been offset to some extent by a lower average
hire rate and by costs associated with implementing the restructuring of the UK
business.
From now onwards, the Spanish operations will be reported on as one enlarged
business. The current period's results therefore represent both Fualsa and
Record Rent, whereas the prior period financial results represent Fualsa only.
The Group's share of profit after tax from its investment in Record for the
prior period is shown in the consolidated income statement as 'Share of profit
of associate'. Spain's revenue has increased by 151% as a result of the
acquisition of the remaining 51% of Record Rent in May 2006 and further organic
fleet growth in both Record Rent and Fualsa, the Group's original Spanish
subsidiary. The fleet size of the enlarged Spanish business was 51,000 vehicles
at 31 October 2006. The blended operating margin for the enlarged Spanish
business is 21.6% (2005 - 22.9%).
The composition of Group revenue and profit from operations is set out below:
2006 2005
£000 £000
Revenue
UK Rental 170,609 143,218
UK Fleet management 6,799 -
Spain Rental 84,714 33,772
----------- -----------
262,122 176,990
----------- -----------
Profit from operations
UK Rental 36,450 29,850
UK Fleet management 370 -
Spain Rental 18,294 7,723
Intangible amortisation (1,969) (374)
----------- -----------
53,145 37,199
----------- -----------
Operating margins (excluding intangible amortisation)
UK Rental 21.4% 20.8%
UK Fleet management 5.4% -
Spain Rental 21.6% 22.9%
The Group's results have been impacted by the increasing costs of debt finance
for both Sterling and Euros with Euribor increasing by 0.75% and Sterling Libor
by 0.5% since the start of the financial year. In December 2006 the Group
concluded a Private Placement in the United States of America by issuing a
series of unsecured loan notes with maturity periods of between seven and ten
years in order to raise $335m of new finance. All of this new finance was
immediately converted to a Sterling equivalent debt of £175m and the Group
entered into a series of financial instruments to fix the rate of interest at an
effective rate of 5.78% p.a. for the period of the loan notes. This exercise has
diversified the Group's source of debt finance and also increased the length of
the overall term of its debt repayment profile. If these loan notes had been in
issue at 31 October 2006 the proportion of the Group's net debt covered by fixed
rate loans on a pro forma basis would have been 50%.
Operational Review
United Kingdom and Republic of Ireland
In the six months to 31 October 2006, the Group has benefited from the synergies
arising out of the acquisition and integration of AVR and from restructuring the
network in order to produce further efficiencies.
The acquisition of AVR became unconditional on 3 February 2006 and in the three
months to 30 April 2006 the acquired business was integrated into the core UK
operation. This involved a net reduction of some 21 locations and 400 employees
acquired with the AVR business. Customer retention since the acquisition, both
through the transitional phase and subsequently, has been excellent. The
portfolio of non-utilised properties that arose from the integration process has
steadily been reduced such that by 31 December 2006 there remained only seven
leasehold properties to be disposed.
In June 2006 the Group announced a restructuring of its UK business. This
restructuring has streamlined the number of hire companies from 35 to 20 to give
fewer, but larger, business units, whilst retaining the existing geographic
network of locations. The restructuring was complete by the end of the calendar
year 2006. The costs associated with the streamlining changes effected by 31
October 2006 and recognised in the income statement were £0.5m. The Board
expects a number of efficiencies to accrue in future periods as a result of this
restructuring, the most important being an overall improvement in fleet
utilisation. The current period saw some improvement with an average fleet
utilisation in the UK of 91% (2005 - 90%).
The average number of vehicles on hire has increased by 3.4% since the beginning
of the financial period broadly in line with the assumption in the Group's
Strategic Plan of 5% per annum growth in the UK. The growth is made up of a
combination of the improvement in the utilisation rate and growth in the vehicle
fleet. Vehicles on hire in the UK have continued to grow throughout November and
December 2006 in line with our expectations.
Competitive pressures on hire rates have always existed in the UK market place
but were particularly evident in the prior financial year when the average
revenue per vehicle decreased by 3%. Whilst the situation improved from February
2006 with the decline in hire rates abating, some of the reduction in rates in
the prior financial year automatically fed through to this period. In addition
to this effect, the acquired AVR business had lower average hire rates than the
core Northgate business because of its different mix of fleet and customers.
Consequently it was expected that the assimilation of this business would lower
the overall hire rate being achieved in the UK. The combined effect of these two
issues is that hire rates are, as expected, on average 3% lower than in the
prior period.
We sold 11,400 vehicles (2005 - 11,300) in the six months under review. The
Group has continued to concentrate on developing its retail and semi-retail
channels to market in order to maximise the residual values that it can achieve
on disposal. The proportion of vehicle disposals that were made through these
channels increased to 16% (2005 - 11%) exceeding the Group's medium term
objective of 15%. The market for used light commercial vehicles has been
favourably influenced by the shortage of new product in some sectors of the
market. This is as a consequence of the majority of manufacturers delaying the
introduction of their new vehicle models in order to introduce Euro IV compliant
engines with regard to fuel emissions. The new models were introduced towards
the end of the period being reported. As a result, fleet operators retained more
of their existing fleet than normal in order to acquire the Euro IV compliant
models when they became available. The combined effect of favourable market
conditions created by the short supply of used product and the Company's
achievement in increasing the proportion of retail and semi-retail sales, gave
rise to a profit of £2.4m (2005 - loss of £0.4m) which under IAS 16 was adjusted
against the vehicle depreciation charge for the period.
This is the first six month period that the Group has included the results from
Fleet Technique Limited ('FTL'), a fleet management company acquired in January
2006. The initial priority for this business was the relocation of its
operations to more suitable premises, which was completed in August 2006.
Consequently, further actions to achieve some of the planned synergies between
the Group's UK rental operations and FTL were deferred until after this
relocation was complete. Nevertheless the £0.4m profit from operations of FTL
was in line with the Board's expectations for the business and we remain
confident of a more significant contribution in the future.
Continental Europe
The Group acquired the remaining 51% of the share capital of Record Rent on 11
May 2006 for a consideration of €72.7m (£49.8m) to add to the initial 49% of the
share capital that had been acquired on 5 August 2005. The total consideration
paid for Record Rent was, therefore, €128.1m (£88.7m). This acquisition
strengthened the Group's position as the leader in the growing Spanish vehicle
rental market with a combined fleet size for Fualsa and Record of 47,000
vehicles at that time.
Following the acquisition of Record Rent, a process was begun to consider both
internal and external candidates for the position of CEO of the enlarged Spanish
business. In September 2006 Fernando Pemartin, formerly Managing Director of
Record Rent, was appointed as CEO for Spain. Subsequent to his appointment he
has structured a management team to take the business forward. Certain vehicle
purchasing and disposal synergies are currently being achieved but some of the
more substantial efficiencies will only be realised when Fualsa and Record
operate on common IT platforms. This is expected to be achieved in the second
half of the calendar year 2007.
Since May 2006 the fleet size has increased by 8.5% to 51,000 vehicles in line
with the Board's expectations of 15% per annum organic growth. At the same time
fleet utilisation has averaged over 90% (2005 - 88%). Hire rates are not
experiencing the same competitive pressures as the UK since the market in Spain
is growing at a much faster rate. The residual value market remains steady and
in line with the levels experienced at the end of the last financial year. The
disposal proceeds for the 6,300 vehicles sold (2005 - 2,200) were therefore in
line with our expectations and gave rise to a profit on disposal of £0.96m (2005
- £0.98m) which has been adjusted against vehicle depreciation in accordance
with IAS 16.
Whilst there have been no locations added to the network in the period, we have
relocated our branches in Cadiz and Malaga to larger premises and have further
relocations planned to accommodate future growth.
Current Trading and Outlook
Trading in both the UK and Spain is in line with expectations and the Board
remains confident of a satisfactory outcome for the full financial year.
Consolidated Income Statement
for the six months ended 31 October 2006
Six months Six months Year to
to 31.10.06 to 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
Notes £000 £000 £000
Revenue 2 262,122 176,990 372,609
Cost of sales (177,102) (116,326) (248,051)
--------- --------- ---------
Gross profit 85,020 60,664 124,558
--------- --------- ---------
Administrative expenses
(excluding amortisation) (29,906) (23,091) (50,733)
Amortisation (1,969) (374) (1,227)
--------- --------- ---------
Total administrative expenses (31,875) (23,465) (51,960)
--------- --------- ---------
--------- --------- ---------
Profit from operations 2 53,145 37,199 72,598
Investment income 1,072 1,009 2,047
Finance costs (16,443) (11,108) (22,125)
--------- --------- ---------
Share of profit before
taxation of associate - 1,702 4,964
Share of taxation of associate - (511) (1,422)
--------- --------- ---------
Share of profit of associate - 1,191 3,542
--------- --------- ---------
--------- --------- ---------
Profit before taxation 37,774 28,291 56,062
Taxation 3 (11,200) (8,345) (15,468)
--------- --------- ---------
Profit for the period 26,574 19,946 40,594
--------- --------- ---------
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 37.1p 30.7p 61.1p
Diluted earnings per Ordinary
share 4 37.0p 30.5p 60.6p
Consolidated Statement of Recognised Income and Expense
for the six months ended 31 October 2006
Six months Six months Year to
to 31.10.06 to 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Foreign exchange differences on retranslation of
net assets of subsidiary undertakings (2,281) 365 1,303
Foreign exchange differences on retranslation of
interest in associate - (237) 413
Foreign exchange differences on revaluation reserve (11) - -
Net foreign exchange differences on long term
borrowings held as hedges 1,875 (91) (1,571)
Net fair value gains on cash flow hedges 435 1,027 2,956
Share options fair value amount (charged) credited
directly to equity (202) 63 20
Net deferred tax (charge) credit recognised
directly in equity (159) 807 882
Actuarial (losses) gains on defined benefit pension
scheme (112) - 356
-------- -------- ---------
Net (expense) income recognised directly in equity (455) 1,934 4,359
Profit attributable to equity holders 26,574 19,946 40,594
-------- -------- ---------
Total recognised income and expense for the period 26,119 21,880 44,953
-------- -------- ---------
Consolidated Balance Sheet
31 October 2006
31.10.06 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Non-current assets
Goodwill 72,247 12,599 44,582
Other intangible assets 28,288 4,533 18,208
-------- -------- ---------
Property, plant and equipment:
vehicles for hire 812,753 545,517 643,824
Other property, plant and equipment 65,039 40,080 50,236
-------- -------- ---------
Total property, plant and equipment 877,792 585,597 694,060
-------- -------- ---------
Interest in associate - 38,915 41,927
-------- -------- ---------
978,327 641,644 798,777
-------- -------- ---------
Current assets
Inventories 8,065 8,443 8,918
Trade and other receivables 164,144 99,728 116,939
Cash and cash equivalents 12,231 7,288 24,048
-------- -------- ---------
184,440 115,459 149,905
-------- -------- ---------
Non-current assets held for sale 18,110 10,588 14,705
-------- -------- ---------
TOTAL ASSETS 1,180,877 767,691 963,387
-------- -------- ---------
Total current liabilities 207,022 77,023 107,323
Non-current liabilities
Long term borrowings 606,496 441,716 518,485
Deferred tax liabilities 28,034 9,270 15,846
Retirement benefit obligation 1,429 - 1,444
-------- -------- ---------
635,959 450,986 535,775
-------- -------- ---------
TOTAL LIABILITIES 842,981 528,009 643,098
-------- -------- ---------
NET ASSETS 337,896 239,682 320,289
-------- -------- ---------
Equity
Share capital 3,555 3,223 3,538
Share premium account 66,746 63,980 64,998
Revaluation reserve 1,043 1,054 1,054
Merger reserve 67,463 4,721 67,463
Own shares reserve (3,755) (2,582) (3,331)
Hedging reserve 3,391 1,027 2,956
Translation reserve 1,221 1,519 1,627
Retained earnings 198,232 166,740 181,984
-------- -------- ---------
TOTAL EQUITY 337,896 239,682 320,289
-------- -------- ---------
Total equity is wholly attributable to equity holders of the parent Company.
Consolidated Cash Flow Statement
for the six months ended 31 October 2006
Six months Six months Year to
to 31.10.06 to 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
Notes £000 £000 £000
Net cash from operating activities 6(a) 104,582 72,250 172,178
-------- -------- ---------
Investing activities
Interest received 744 1,046 1,931
Proceeds from disposal of vehicles for
hire 91,591 69,795 150,849
Purchases of vehicles for hire (205,433) (151,023) (306,273)
Proceeds from disposal of other
property, plant and equipment 1,523 218 3,307
Purchases of other property, plant and
equipment (5,348) (3,804) (12,208)
Purchases of intangible assets (741) (41) (927)
Payment of Fualsa deferred
consideration (10,290) - -
Acquisition of subsidiary undertakings,
including net cash and bank overdraft
balances acquired 7 (49,540) - (130,047)
Purchase of interest in associate - (37,961) (37,972)
-------- -------- ---------
Net cash used in investing activities (177,494) (121,770) (331,340)
-------- -------- ---------
Financing activities
Dividends paid (9,848) (7,665) (13,459)
Repayments of obligations under finance
leases (38,828) (21,260) (36,994)
Repayments of bank loans and other
borrowings - (48,660) -
Increase in bank loans and other
borrowings 105,753 94,258 130,988
Proceeds from issue of share capital 1,765 1,450 65,525
Proceeds from sale of own shares 23 - 511
Payments to acquire own shares (447) (111) (1,371)
-------- -------- ---------
Net cash from financing activities 58,418 18,012 145,200
-------- -------- ---------
Net decrease in cash and cash
equivalents (14,494) (31,508) (13,962)
Cash and cash equivalents at the
beginning of the period 20,259 34,057 34,057
Effect of foreign exchange movements (227) 46 164
-------- -------- ---------
Cash and cash equivalents at the end of
the period 6(b) 5,538 2,595 20,259
-------- -------- ---------
Consolidated Statement of Changes in Equity
for the six months ended 31 October 2006
Six months Six months Year to
to 31.10.06 to 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Amounts attributable to equity holders
of the parent Company
Foreign exchange differences on
retranslation of net assets of
subsidiary undertakings (2,281) 365 1,303
Foreign exchange differences on
retranslation of interest in associate - (237) 413
Foreign exchange differences on
revaluation reserve (11) - -
Net foreign exchange differences on
long term borrowings held as hedges 1,875 (91) (1,571)
Net fair value gains on cash flow hedges 435 1,027 2,956
Share options fair value amount (charged)
credited directly to equity (202) 63 20
Actuarial (losses) gains on defined
benefit pension scheme (112) - 356
Net deferred tax (charge) credit
recognised directly in equity (159) 807 882
-------- -------- ---------
Net (expense) income recognised
directly in equity (455) 1,934 4,359
Profit attributable to equity holders 26,574 19,946 40,594
-------- -------- ---------
Total recognised income and expense
for the period 26,119 21,880 44,953
Dividends (9,853) (7,645) (13,437)
Issue of Ordinary share capital (net
of expenses) 1,765 1,450 65,525
Net increase in own shares held (424) (111) (860)
-------- -------- ---------
Net changes in total equity 17,607 15,574 96,181
-------- -------- ---------
Opening total equity 320,289 225,031 225,031
Transitional adjustment on adoption
of IAS 32 & IAS 39 - (923) (923)
-------- -------- ---------
Opening total equity after adoption
of IAS 32 & IAS 39 320,289 224,108 224,108
-------- -------- ---------
-------- -------- ---------
Closing total equity 337,896 239,682 320,289
-------- -------- ---------
Unaudited Notes
1. Basis of preparation and accounting policies
The interim financial information for the six months ended 31 October 2006,
including comparative financial information, has been prepared on the basis of
the accounting policies set out in the last annual report and accounts, and in
accordance with International Financial Reporting Standards ('IFRS'), as issued
by the International Accounting Standards Board, that are endorsed, or are
expected to be endorsed, by the European Commission.
Northgate plc ('the Group') has adopted all IFRS in issue, with the exception of
IAS 34 (Interim Financial Reporting) which is not mandatory for UK groups.
The accounts for the year ended 30 April 2006 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 segments
For management purposes, the Group currently has one material business segment,
which is the hire of vehicles.
As such, the Directors consider that this is the only business segment on which
the Group should report.
Geographical segments
The 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 31.10.06 to 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
United Kingdom and Republic of Ireland 177,408 143,218 300,771
Spain 84,714 33,772 71,838
-------- -------- ---------
Total revenue 262,122 176,990 372,609
-------- -------- ---------
United Kingdom and Republic of Ireland 35,791 29,744 58,149
Spain 17,354 7,455 14,449
-------- -------- ---------
Total profit from operations 53,145 37,199 72,598
-------- -------- ---------
3. Taxation
The charge for taxation for the six months to 31 October 2006 is based
on the estimated effective rate for the year.
4. Earnings per share
Six months Six months Year to
to 31.10.06 to 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
(a) Basic and diluted earnings per share
The calculation of basic and diluted earnings per share is
based on the following data:
Earnings £000 £000 £000
Earnings for the purposes of basic and diluted earnings
per share, being net profit attributable to equity holders
of the parent Company 26,574 19,946 40,594
-------- --------- ---------
Number of shares Number Number Number
Weighted average number of Ordinary shares for the
purposes of basic earnings per share 71,631,826 64,981,565 66,481,499
Effect of dilutive potential Ordinary shares:
- share options 242,103 489,231 464,060
-------- --------- ---------
Weighted average number of Ordinary shares for the
purposes of diluted earnings per share 71,873,929 65,470,796 66,945,559
-------- --------- ---------
Basic earnings per share 37.1p 30.7p 61.1p
Diluted earnings per share 37.0p 30.5p 60.6p
(b) Earnings per share before amortisation and
non-recurring restructuring costs £000 £000 £000
Earnings for the purpose of basic and
diluted earnings per share (above) 26,574 19,946 40,594
Amortisation (net of tax) 1,427 374 1,227
Non-recurring restructuring costs (net
of UK corporation tax at 30%) - - 1,825
-------- --------- ---------
Earnings for the purposes of basic and
diluted earnings per share before 28,001 20,320 43,646
amortisation and non-recurring restructuring costs
-------- --------- ---------
Basic earnings per share before amortisation and
non-recurring restructuring costs 39.1p 31.3p 65.7p
Diluted earnings per share before amortisation and
non-recurring restructuring costs 39.0p 31.0p 65.2p
5. Dividends
The proposed interim dividend of 10p per Ordinary share was approved by
the Board of Directors on 8 January 2007 and has not been included as a
liability as at 31 October 2006.
6. Notes to the consolidated cash flow statement
(a) Net cash from operating activities
Six months Six months Year to
to 31.10.06 to 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Profit from operations 53,145 37,199 72,598
Adjustments for:
Depreciation of property,
plant and equipment 98,022 65,674 136,209
Exchange differences - - (16)
Amortisation of intangible assets 1,969 374 1,227
Gain on disposal of property, plant
and equipment (695) (2) (209)
Defined benefit pension credit (236) - (386)
Share options fair value amount (charged)
credited directly to equity (202) 63 20
------- -------- ---------
Operating cash flows before movements in
working capital 152,003 103,308 209,443
(Increase) decrease in inventories 3,592 (1,725) (2,191)
Increase in receivables (10,401) (6,195) (1,131)
(Decrease) increase in payables (13,093) (3,948) 3,139
------- -------- ---------
Cash generated by operations 132,101 91,440 209,260
Income taxes paid (11,282) (8,658) (15,156)
Interest paid (16,237) (10,532) (21,926)
------- -------- ---------
Net cash from operating activities 104,582 72,250 172,178
------- -------- ---------
(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:
31.10.06 31.10.05 30.4.06
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Cash in hand and at bank 10,348 5,500 22,201
Short term investments 1,883 1,788 1,847
-------- -------- ---------
Gross cash and cash equivalents as reported 12,231 7,288 24,048
Bank overdrafts (6,693) (4,693) (3,789)
-------- -------- ---------
Net cash and cash equivalents 5,538 2,595 20,259
-------- -------- ---------
7. Acquisitions of subsidiary undertakings
(a)Record Rent a Car S.A.
On 5 August 2005, the Group acquired a 49% share in Record Rent a Car S.A.
('Record'), a Company registered in Spain, for a cash consideration, payable to
the vendors, of €54,800,000. In accordance with IAS 28, this investment,
including associated costs, was accounted for as an associate under the equity
method of accounting.
On 11 May 2006, the Group acquired the remaining 51% of the issued share capital
of Record for a consideration of €72,700,000, payable to the vendors, under the
share purchase agreement. The transaction has been accounted for under the
purchase method of accounting in the six months ended 31 October 2006.
The detail relating to the 100% share of Record is shown below:
(Unaudited)
£000
Fair value of net assets acquired 59,106
Goodwill 29,584
--------
Acquisition cost (including expenses) 88,690
--------
Fair value of consideration:
Cash payment for 100% share of Record (including expenses) 88,690
Net cash with subsidiary undertaking acquired (299)
Purchase of investment in associate as at 30 April 2006 (38,385)
--------
Cash outflow in the period on acquisition of Record 50,006
--------
(b) Northgate (AVR) Limited
On 3 February 2006, the Group acquired the entire issued share capital of
Northgate (AVR) Limited (formerly Arriva Vehicle Rental Limited) ('AVR') for an
original cash consideration of £50,316,000, including goodwill of £28,055,000.
The transaction was accounted for in accordance with the purchase method of
accounting in the year ended 30 April 2006.
In the six months ended 31 October 2006, the Group paid a further £3,699,000 to
the vendor, under the terms of the sale and purchase agreement, and further fair
value adjustments were made, totalling £4,028,000, as follows:
(Unaudited)
£000
Fair value of net assets acquired as originally stated in
2006 Annual Report 22,261
Further fair value adjustments made 4,028
---------
Fair value of net assets acquired 26,289
---------
Acquisition cost (including expenses) as originally stated
in 2006 Annual Report 50,316
Net consideration adjustments with the vendor in the period 3,699
---------
Acquisition cost (including expenses) 54,015
---------
Goodwill as originally stated in 2006 Annual Report 28,055
---------
Goodwill as at 31 October 2006 27,726
---------
Proceeds from disposal of intangible assets to the vendor 4,165
Consideration adjustment offset against disposal proceeds of
intangible assets (3,699)
---------
Net cash inflow in the period relating to the acquisition of
AVR 466
---------
In both of the above acquisitions, the fair values represent the Directors'
current estimates of the net assets acquired.
In accordance with IFRS 3, the values attributed may be revised as further
information becomes available.
This information is provided by RNS
The company news service from the London Stock Exchange
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