Interim Results
Northgate PLC
10 January 2006
10 January 2006
NORTHGATE PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 OCTOBER 2005
Northgate plc ('Northgate', the 'Company' or the 'Group'), the UK's leading
specialist in light commercial vehicle hire, announces its interim results for
the half-year ended 31 October 2005.
Highlights:
•Group revenue increased by 5.9% to £176.9m (2004 - £167.1m).
•Pre-tax profit up by 2.4%* to £28.3m (2004 - £27.6m).
•Earnings per share up by 3.4% to 30.7p (2004 - 29.7p).
•Dividend increased by 12.5% to 9.0p (2004 - 8.0p).
•Excellent first time contribution from Spanish associate Record Rent with
a fleet size in excess of 20,000 vehicles.
•Fleet size in Fualsa (Spain) increased by 26% per annum to 21,500.
•Fleet size of 52,400 vehicles in the UK.
•New Strategic Plan announced today.
*Northgate's profit before tax under UK GAAP would have shown an increase of
5.6% but this is reduced to 2.4% under IFRS.
Martin Ballinger, Chairman, commented: 'The Board remains confident of a
satisfactory outcome for the full financial year and further believes that its
strategy will enable Northgate to retain its leading positions in commercial
vehicle rental in both the UK and Spain and as a result continue to generate a
growing return 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
Notes to Editors:
Northgate plc rents light commercial vehicles and sells a range of fleet
products to businesses via a network of hire companies. Their NORFLEX product
gives businesses access to a flexible method to acquire as many commercial
vehicles as they require.
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 2005, the Group has continued to take advantage
of the undoubted opportunities that exist within its main markets of the UK and
Spain.
As described in my statement to the AGM in September, conditions in the UK have
become more competitive. Management has responded positively to these conditions
by taking specific actions to mitigate the impact of a market characterised by
weaker residuals and lower hire rates.
In August 2005 the Group successfully concluded the initial purchase of 49% of
Record Rent a Car S.A. ('Record' or 'Record Rent') strengthening its position as
a leading player in the growing Spanish vehicle rental market. The remaining 51%
of Record's equity is scheduled to be acquired in April or May 2006.
Group vehicle rental and associated revenue in the six months to 31 October 2005
is up 5.9%, profit before tax is up 2.4% and earnings per share up 3.4%. The
impact of International Financial Reporting Standards ('IFRS') on these results
is such that the Group's profit before tax under UK GAAP would have shown an
increase of 5.6% but this is reduced to 2.4% under IFRS.
The Board has declared a 12.5% increase in the interim dividend to 9p per share
(2004 - 8p) indicating its confidence in the Group's future prospects. This
dividend is payable on 9 February 2006 to shareholders on the register at the
close of business on 20 January 2006.
Results
The six month trading period to 31 October 2005 is the first accounting period
that the Group has prepared its results under IFRS. The Group released an
announcement on 21 December 2005 detailing the impact of IFRS on the comparative
accounting period including the six months to 31 October 2004. The full
announcement is available on the Group's website www.northgateplc.com.
The main presentational change to the Group's financial results arises from
proceeds received from the disposal of used vehicles no longer being classified
as revenue. This change in policy has had the effect of reducing Group revenue
as previously defined under UK GAAP. Group revenue now comprises the hire of
vehicles and the supply of related goods and services in the normal course of
business.
The impact of IFRS on profit before tax for the six months to 31 October 2004
was limited, with the primary difference arising from the treatment of goodwill
amortisation (IFRS 3) and intangible amortisation (IAS 38). In the IFRS
announcement the Board detailed a number of elections that it had made under
IFRS 1 regarding the first time implementation of IFRS. One of these elections
concerned financial instruments (IAS 32 & IAS 39) whereby the Board elected to
implement the provisions of the standard with effect from 1 May 2005.
The period to 31 October 2004 does not show any effect of IAS 39 because it had
not been implemented. At 1 May 2005, and subsequently in June 2005 in relation
to new derivative contracts, the Group designated the majority of its financial
instruments as hedges against specific variable rate borrowings. These hedged
instruments had a net fair value gain of £1m in the six month period which has
been credited directly to equity. The remaining instruments, being interest rate
collars matched against £115m of debt were not accounted for as hedges and gave
rise to a £0.4m additional non-cash finance cost in the income statement for the
six months to 31 October 2005.
In August 2005 the Group's purchase of 49% of the equity in Record Rent, a
leading Spanish rental operator became unconditional. In accordance with IAS 1
the Group's share of Record's after tax contribution has been shown as part of
the Group's profit before tax.
UK revenue increased by 1.4% reflecting the limited increase in the UK fleet
size to 52,400 vehicles (2004 - 52,000). Margins have slightly decreased partly
as a consequence of lower values being obtained for vehicles sold at the end of
their life and partly as a result of lower hire rates being obtained in a more
competitive market.
The revenue and profit from operations that are shown as arising in Spain in the
table below are wholly attributable to Fualsa. The Group's share of profits
after tax generated from its investment in Record is shown in the consolidated
income statement as 'Share of profit of associate'.
Fualsa's revenue has increased by 30.8% as a result of the fleet size increasing
to 21,500 vehicles (2004 - 17,000). The operating margin for Fualsa has
decreased by 1.2% in line with our expectations, as the cost base increased to
accommodate the expanded network, changes in regional and senior management
required for future growth, an upgrade to the IT system and the introduction of
credit insurance. Values obtained for used vehicle disposals have been in line
with our expectations.
A reconciliation between profit before intangible amortisation and tax under UK
GAAP and IFRS is set out below:
2005 2004
£'000 £'000
Profit before intangible amortisation and tax
UK GAAP 29,380 27,774
IAS 1 - tax on profit of associates (511) -
IAS 39 - unhedged financial instruments (422) -
Other differences 218 274
------- -------
IFRS 28,665 28,048
------- -------
The composition of Group revenue and profit from operations is set out below:
2005 2004
£'000 £'000
Revenue
UK 143,218 141,254
Spain 33,772 25,828
-------- --------
176,990 167,082
-------- --------
Profit from operations
UK 29,850 31,859
Spain 7,723 6,234
Intangible amortisation (374) (409)
-------- --------
37,199 37,684
-------- --------
Operating margins (excluding intangible amortisation)
UK 20.8% 22.6%
Spain 22.9% 24.1%
Operational Review
United Kingdom and Republic of Ireland
In the six months to 31 October 2005 the Group was affected by some weakness in
demand from those UK customers operating in the construction, retail and
distribution sectors. To ensure we continued to achieve our utilisation target
of 90%, it was necessary to reduce the fleet from 52,600 vehicles at 30 April
2005 to 51,400 vehicles at the end of August, the low point in the period. Since
the start of September demand has returned to more normal levels and, as a
consequence, fleet growth resumed such that the fleet had reached 52,400
vehicles at 31 October 2005. This growth has continued in line with our
expectations throughout November and December.
As a consequence of the fleet movement described above we have taken action on
the cost base including a decision to defer the opening of some new sites. This
has resulted in our network of hire locations only increasing to 79 from the 76
that existed at 30 April 2005, with the majority of the new locations being
opened early in the financial year. Whilst the 79 locations that we operate from
provide full national coverage, there still exists the opportunity for infill
sites, in particular smaller branches, over the coming years.
Competitive pressures have always existed in the market place but became
particularly evident from the beginning of August 2005, when as a result of
specific competitor activity we experienced lower hire rates. The reduction in
hire rates in the period was over 1% and we expect a further reduction in the
second half of the financial year.
The impact of lower fleet growth in the summer and weaker hire rates has been
balanced by our continued tight grip on utilisation and a focus on reducing
central and administrative costs.
We sold 11,300 vehicles (2004 - 7,800) in the six months under review. As
highlighted in our preliminary results announcement in July 2005, we have
experienced a weaker market for used vehicle values. The effect of this has
reduced operating profits by £2.4m in the period. This was particularly
noticeable in the early part of the period when our vehicle stock was at its
peak and the fall in residual values of long wheel base product was largest.
Under IFRS the operating profit for used vehicle disposals is no longer
accounted for separately. Depreciation is adjusted in order that vehicles are
retired from the fleet at their anticipated market value less any direct costs
incurred in their disposal. If this operating profit arising from the used
vehicle disposals had been calculated on the same basis as last year, applying
UK GAAP, the UK would have recorded an operating loss per vehicle on disposal of
£24 (2004 - £276 profit).
The overall result is a decline in the UK operating margin (excluding intangible
amortisation) to 20.8% (2004 - 22.6%). Eliminating the effect of the reduction
in residual values shows that the underlying rental activities produce an
operating margin of just under 21%, consistent with the prior period.
Continental Europe
Fualsa, our first business in Spain, continued to grow strongly. The fleet
increased from 19,000 vehicles at 1 May 2005 to 21,500 at 31 October 2005, an
increase of 13%. When compared to the fleet at 31 October 2004, the annual
growth rate remains in line with previous years at an excellent 26%.
New locations have been opened in Leon, Cordoba, Pamplona and Madrid during the
period and the company now has a network of 19 locations offering good national
coverage.
Utilisation has averaged 88% (2004 - 89%) which is close to our target of 90%
but is still influenced by the number of new locations opened during the last
two years. 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 is steady and the disposal proceeds that we have achieved are in
line with our expectations. Having recognised the increasing number of disposals
that Fualsa will have to undertake in the future as its fleet growth continues,
we have invested in the infrastructure of the disposal process. Consequently,
calculating operating profit from used vehicle disposals on the same basis as
last year (applying UK GAAP), Fualsa would have recorded such an operating
profit per vehicle of £92 (2004 - £219).
On 5 July 2005 we announced the purchase of 49% of Record Rent, which similar to
Fualsa, is one of Spain's leading vehicle rental companies. The acquisition was
conditional on the approval of the Spanish competition authorities, which was
received on 5 August 2005.
We have been delighted with the performance of this business since our
investment. The fleet has grown to over 20,000 vehicles at 31 October 2005 from
18,000 at 5 July 2005 and utilisations have been maintained at over 90%. Two new
locations are planned to open during the second half of the financial year. The
combination of all these factors has produced a share of profit before taxation
for the Group of £1.7m and a share of taxation of £0.5m. The Group's share of
after tax profits is, therefore, £1.2m for the three month period since our
investment was made.
The remaining 51% of the share capital of Record Rent will be purchased
following the completion of the audited accounts for the year ended 31 December
2005, scheduled for April or May 2006.
Strategic Plan
In November 2005 the Board approved a new Strategic Plan. Rather than the fixed
five and three year periods that have been the basis of planning since 1999, we
are moving to a three year rolling business plan which will be updated each
year.
The Group Strategic Plan builds on the key issues identified in our last
published plan and aims to maintain double digit earnings growth across the
Group. Our first venture into Spain has worked well and we are now able to
develop this fast-growing market with our subsequent acquisition of Record,
whilst planning to continue moving forward in the UK, albeit at more modest
levels of growth.
In the UK, a more mature market than Spain, there remain opportunities to
increase market penetration, which is still relatively low at around 10% of the
total commercial vehicle parc. There is capacity in the Group's UK network to
increase the fleet by both acquisition, in what is still a fragmented market,
and through organic growth whilst at the same time enhancing returns through the
introduction of related fleet management products. The provision of fleet
management to those customers who both own and rent their fleets will allow us
to capitalise on our key skills of buying, selling and maintaining large volumes
of commercial vehicles whilst providing the opportunity to generate additional
rental business from fleet customers. This will further strengthen our position
as the market leader in the delivery of flexible vehicle solutions to businesses
on both a local and national level. The result of these actions will also be a
more cost-effective structure capable of responding to a wider range of customer
needs.
In Spain we consider there is potential for organic fleet growth at the rate of
approximately 15% per annum over the next three years. The most important issues
to deal with in Spain, therefore, focus on the integration of Fualsa and Record
and ensuring we obtain the maximum benefit from the size of the combined entity
in terms of purchasing power, revenue growth and efficiency of operation. We are
very pleased with the capability of the management we have in both businesses
and feel that we have in place the right people to create a team capable of
delivering the plan.
Our success in Spain gives us confidence that our model can transfer to another
jurisdiction at an appropriate time, although we recognise that the management
focus required for our plans in the UK and Spain make it likely that this will
be deferred until the later stages of the plan.
Current Trading and Outlook
The Board believes that the more competitive conditions in the UK vehicle rental
market are being matched by continuing management actions to reduce costs and
improve vehicle utilisation and efficiencies. In Spain, both Fualsa and Record
continue to trade well and are taking advantage of an expanding market.
The Board remains confident of a satisfactory outcome for the full financial
year and further believes that its strategy will enable Northgate to retain its
leading positions in commercial vehicle rental in both the UK and Spain and as a
result continue to generate a growing return for shareholders.
Consolidated Income Statement
for the six months ended 31 October 2005
Six months Six months Year
to to to
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
Notes £000 £000 £000
Revenue 2 176,990 167,082 339,382
Cost of sales (116,326) (102,499) (215,097)
--------- --------- --------
Gross profit 60,664 64,583 124,285
--------- --------- --------
Administrative
expenses
(excluding
amortisation) (23,091) (26,490) (47,193)
Amortisation (374) (409) (855)
--------- --------- --------
Total
administrative
expenses (23,465) (26,899) (48,048)
--------- --------- --------
--------- --------- --------
Profit from
operations 2 37,199 37,684 76,237
Investment income 1,009 871 1,814
Finance costs (11,108) (10,916) (23,063)
--------- --------- --------
Share of profit before
taxation of associate 1,702 - -
Share of taxation of associate (511) - -
--------- --------- --------
Share of profit of associate 1,191 - -
--------- --------- --------
--------- --------- --------
Profit before taxation 28,291 27,639 54,988
Taxation 3 (8,345) (8,449) (15,757)
--------- --------- --------
Profit for the period 19,946 19,190 39,231
--------- --------- --------
Profit for the period is wholly attributableto equity holders of the parent
Company.
All results arise from continuing operations.
Basic earnings
per Ordinary
share 4 30.7p 29.7p 60.7p
Diluted
earnings per
Ordinary share 4 30.5p 29.5p 60.3p
Consolidated Statement of Recognised Income and Expense
for the six months ended 31 October 2005
Six months Six months Year
to to to
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Gains on revaluation of
land and properties - 579 1,031
Foreign exchange differences on
retranslation of net assets
of subsidiaries 365 944 (153)
Foreign exchange differences on
retranslation of interest in
associate (237) - -
Net foreign exchange differences on
long term borrowings
held as hedges (91) - 1,635
Net fair value gains on cash
flow hedges 1,027 - -
Adjustment for share options
granted 63 (19) 88
Net deferred tax credit recognised
directly in equity 807 1,508 1,084
-------- --------- --------
Net income recognised directly in
equity 1,934 3,012 3,685
Profit attributable to equity
holders 19,946 19,190 39,231
-------- --------- --------
Total recognised income and
expense for the period 21,880 22,202 42,916
-------- --------- --------
Consolidated Balance Sheet
31 October 2005
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
Notes £000 £000 £000
Non-current assets
Goodwill 12,599 13,427 12,448
Other intangible
assets 4,533 5,302 4,866
-------- --------- ----------
Property,plant and
equipment: vehicles
for hire 545,517 516,697 531,843
Other property,plant
and equipment 40,080 33,417 37,851
-------- --------- ----------
Total property,
plant and equipment 585,597 550,114 569,694
-------- --------- ----------
Interest in
associate 7 38,915 - -
-------- --------- ----------
641,644 568,843 587,008
-------- --------- ----------
Current assets
Inventories 8,443 6,121 6,696
Trade and other
receivables 99,728 87,257 92,841
Cash and cash
equivalents 7,288 22,570 41,375
-------- --------- ----------
115,459 115,948 140,912
-------- --------- ----------
Non-current
assets held for sale 10,588 12,652 11,464
-------- --------- ----------
TOTAL ASSETS 767,691 697,443 739,384
-------- --------- ----------
Total current
liabilities 77,023 196,386 100,410
Non-current liabilities
Borrowings 441,716 281,249 403,819
Deferred tax
liabilities 9,270 9,745 10,124
-------- --------- ----------
450,986 290,994 413,943
-------- --------- ----------
TOTAL
LIABILITIES 528,009 487,380 514,353
-------- --------- ----------
-------- --------- ----------
NET ASSETS 239,682 210,063 225,031
-------- --------- ----------
Equity
Share capital 3,223 3,206 3,209
Share premium
account 63,980 62,201 62,544
Revaluation
reserve 1,054 602 1,054
Merger reserve 4,721 4,721 4,721
Own shares
reserve (2,582) (1,515) (2,471)
Hedging
reserve 1,027 - -
Translation
reserve 1,519 944 1,482
Retained
earnings 166,740 139,904 154,492
-------- --------- ----------
TOTAL EQUITY 239,682 210,063 225,031
-------- --------- ----------
Total equity is wholly attributable to equity holders of the parent Company.
Consolidated Cash Flow Statement
for the six months ended 31 October 2005
Six months Six months Year
to to to
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
Notes £000 £000 £000
Net cash from
operating
activities 6(a) 72,250 73,766 150,457
-------- --------- ----------
Investing activities
Interest
received 1,046 265 1,957
Proceeds of
disposal of
vehicles for
hire 69,795 50,039 116,895
Purchases of
vehicles for
hire (151,023) (134,107) (274,517)
Proceeds of
disposal of
other
property,
plant and
equipment 218 221 378
Purchases of
other
property,
plant and
equipment (3,804) (2,350) (7,613)
Purchases of
intangible
assets (41) (11) (19)
Acquisition of
subsidiaries - (19,360) (19,353)
Purchase of
interest in
associate 7 (37,961) - -
-------- --------- ----------
Net cash used in investing
activities (121,770) (105,303) (182,272)
-------- --------- ----------
Financing activities
Dividends paid (7,665) (6,764) (11,874)
Repayments of
obligations
under finance
leases (21,260) (124,030) (279,243)
New finance
lease
agreements
entered into - 78,680 93,663
Repayments of
bank loans and
other
borrowings (48,660) - -
Increase in
bank loans and
other
borrowings 94,258 47,136 221,166
Proceeds from
issue of share
capital 1,450 376 722
Payments to
acquire own
shares (111) - (1,141)
-------- --------- ----------
Net cash from (used in)financing
activities 18,012 (4,602) 23,293
-------- --------- ----------
Net decrease in cash and cash
equivalents (31,508) (36,139) (8,522)
Cash and cash equivalents at
the beginning of the period 34,057 42,675 42,675
Effect of foreign exchange
movements 46 58 (96)
-------- --------- ----------
Cash and cash equivalents
at the end of the period 2,595 6,594 34,057
-------- --------- ----------
Consolidated Statement of Changes in Equity
for the six months ended 31
October 2005
Six months Six months Year
to to to
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
Notes £000 £000 £000
Amounts attributable to
equity holders of the parent Company
Gains on revaluation of land and
properties - 579 1,031
Foreign exchange differences on
retranslation of net assets of
subsidiaries 365 944 (153)
Foreign exchange differences on
retranslation of interest in
associate (237) - -
Net foreign exchange
differences on long term
borrowings held as hedges (91) - 1,635
Net fair value gains on cash
flow hedges 1,027 - -
Adjustment for
share options
granted 63 (19) 88
Net deferred
tax credit
recognised
directly in
equity 807 1,508 1,084
-------- --------- ----------
Net income
recognised
directly in
equity 1,934 3,012 3,685
Profit
attributable
to equity
holders 19,946 19,190 39,231
-------- --------- ----------
Total
recognised
income and
expense for
the period 21,880 22,202 42,916
Dividends (7,645) (6,780) (11,916)
Issue of
Ordinary share
capital (net
of expenses) 1,450 376 722
Net increase
in own shares
held (111) (185) (1,141)
-------- --------- ----------
Net changes in
total equity 15,574 15,613 30,581
-------- --------- ----------
Opening total
equity 225,031 194,450 194,450
Transitional
adjustment on
adoption of
IAS 32 & IAS
39 8 (923) - -
-------- --------- ----------
Opening total
equity after
adoption of
IAS 32 & IAS
39 224,108 194,450 194,450
-------- --------- ----------
-------- --------- ----------
Closing total
equity 239,682 210,063 225,031
-------- --------- ----------
In accordance with the transitional provisions of IFRS 1, the date of
transition of the Group to IFRS for the purposes of IAS 32 and IAS 39
only is 1 May 2005. See Note 8 for further details.
Unaudited Notes
1. Basis of preparation and accounting policies
The interim financial information for the six months ended 31 October
2005, including comparative financial information, has been prepared 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 Group previously prepared its annual and interim consolidated
accounts under UK GAAP. The date of transition of the Group to IFRS is 1
May 2004, with the exception of IAS 32 and IAS 39. The date of
transition of the Group for IAS32 and IAS39 only is 1 May 2005 (see Note
8). As part of the transition to IFRS, on 21 December 2005 the Group
published the restatement of certain comparative financial information
under IFRS for the year ended 30 April 2005 and for the six months ended
31 October 2004. This information is available from the Group's website
at www.northgateplc.com.
IFRS 1 (First-time Adoption of IFRS) contains several transitional
exemptions from the full requirements of IFRS for those companies
adopting IFRS for the first time. The details of the IFRS 1 transitional
exemptions that the Group has taken advantage of, along with all of the
accounting policies adopted by the Group, are detailed within the
restatement of comparative information under IFRS published on 21
December 2005, as referred to above.
The accounts for the year ended 30 April 2005 were prepared under UK
GAAP 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. The restatement of
certain information for the year ended 30 April 2005 published on 21
December 2005, which does not constitute statutory accounts, also
contained an unqualified audit report.
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.
Geograpical 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 to
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
United Kingdom
and Republic
of Ireland 143,218 141,254 283,414
Spain 33,772 25,828 55,968
-------- --------- ----------
Total revenue 176,990 167,082 339,382
-------- --------- ----------
United Kingdom
and Republic
of Ireland 29,744 31,718 62,542
Spain 7,455 5,966 13,695
-------- --------- ----------
Total profit
from
operations 37,199 37,684 76,237
-------- --------- ----------
3. Taxation
The charge for taxation for the six months to 31 October 2005 is based
on the estimated effective rate for the year.
4. Earnings per share
Six months Six months Year
to to to
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
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 theparent Company 19,946 19,190 39,231
-------- --------- ----------
Number of shares Number Number Number
Weighted average number
of Ordinary shares for the
purposes of basic earnings
per share 64,981,565 64,600,406 64,598,909
Effect of dilutive potential
Ordinary shares:
- share
options 489,231 382,037 465,690
-------- --------- ----------
Weighted average number
of Ordinary shares for the
purposes of diluted
earnings per
share 65,470,796 64,982,443 65,064,599
-------- --------- ----------
5. Dividends
The proposed interim dividend of 9p per Ordinary share was approved by
the Board of Directors on 9 January 2006 and has not been included as a
liability as at 31 October 2005.
6. Notes to the consolidated cash flow statement
(a) Net cash from operating activities
Six months Six months Year
to to to
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Profit from
operations 37,199 37,684 76,237
Adjustments for:
Depreciation
of property,
plant and
equipment 65,674 59,149 120,831
Amortisation
of intangible
assets 374 409 855
(Gain) loss on
disposal of
property,
plant and
equipment (2) 19 39
Share options
fair value
amount
credited
(charged)
directly
to
equity 63 (19) 88
-------- --------- ----------
Operating cash
flows before
movements in
working
capital 103,308 97,242 198,050
(Increase)
decrease in
inventories (1,725) 2,313 1,665
Increase in
receivables (6,195) (703) (7,735)
Decrease in
payables (3,948) (7,689) (3,634)
-------- --------- ----------
Cash generated
by operations 91,440 91,163 188,346
Income taxes
paid (8,658) (7,775) (15,241)
Interest paid (10,532) (9,622) (22,648)
-------- --------- ----------
Net cash from
operating
activities 72,250 73,766 150,457
-------- --------- ----------
(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:
31.10.05 31.10.04 30.4.05
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Cash in hand
and at bank 5,500 20,817 39,601
Short term
investments 1,788 1,753 1,774
-------- --------- ---------
Gross cash and
cash
equivalents as
reported 7,288 22,570 41,375
Bank
overdrafts (4,693) (15,976) (7,318)
-------- --------- ---------
Net cash and
cash
equivalents 2,595 6,594 34,057
-------- --------- ---------
7. Interest in associate
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, has been
accounted as an associate.
The book value of the 49% share of the net assets of Record, that was
acquired on 5 August 2005, was €38,124,000.
8. Financial instruments: transitional adoption of IAS 32 and IAS 39
Under the transitional provisions of IFRS 1, the date of transition of the
Group for IAS 32 (Financial Instruments: Disclosure and Presentation) and
IAS 39 (Financial Instruments: Recognition and Measurement) is 1 May 2005.
The Group has not applied IAS 32 or IAS 39 retrospectively from this date,
with the exception of preference shares. A reconciliation of equity, in respect
of IAS 32 and IAS 39 only, at 1 May 2005 is provided below:
30.4.05 Adjustments 1.5.05
Prior to on After
adoption of adoption of adoption of
IAS 32 & IAS 32 & IAS 32 &
IAS 39 IAS 39 IAS 39
(Audited) (Unaudited) (Unaudited)
£000 £000 £000
TOTAL ASSETS 739,384 - 739,384
------- --------- ---------
Total current
liabilities 100,410 923 101,333
Total
non-current
liabilities 413,943 - 413,943
------- --------- ---------
TOTAL
LIABILITIES 514,353 923 515,276
------- --------- ---------
------- --------- ---------
NET ASSETS 225,031 (923) 224,108
------- --------- ---------
Share capital 3,209 - 3,209
Share premium
account 62,544 - 62,544
Revaluation
reserve 1,054 - 1,054
Merger reserve 4,721 - 4,721
Own shares
reserve (2,471) - (2,471)
Translation
reserve 1,482 - 1,482
Retained
earnings 154,492 (923) 153,569
------- --------- ---------
TOTAL EQUITY 225,031 (923) 224,108
------- --------- ---------
As explained in Note 1, all other reconciliations relating to the transition of
the Group to IFRS were published on 21 December 2005 and are available on the
Group's website www.northgateplc.com.
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