Final Results
Northgate PLC
02 July 2003
Wednesday 2 July 2003
NORTHGATE PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2003
Northgate plc (the 'Company', the 'Group'), the UK's leading specialist in light
commercial vehicle hire, announces its preliminary results for the year ended 30
April 2003.
• Turnover up 21.6% to £337.9m (2002: £277.8m)
• Pre-tax profit up 15.5% to £36.6m (2002: £31.7m)
• Strong gross cash flow with EBITDA up 12% at £148m (2002: £132m)
• Earnings per share up 15.6% to 41.4p (2002: 35.8p)
• Total dividend increased by 6.7% to 16p (2002: 15p)
• Fleet increased by 11.1% to 45,000 vehicles, utilisation maintained
at 90%
• Fualsa is earnings enhancing in first 10 months of investment
• Earnings per share up 117% over first four years of five year plan
• New three year strategic plan now in place
Michael Waring, Chairman, commented:
'The Board is delighted with the progress made within our five year Strategy for
Growth for the UK, as evidenced by a 21% annual compound growth rate in earnings
per share over the last four years. We are also pleased to announce our new
three year strategic plan to April 2006, details of which are set out in the
attached statement.
'During the year Northgate has performed consistently in respect of all of its
key performance indicators, generated strong cashflows and maintained its high
fleet utilisation rates. We continue to grow in the UK and remain convinced
that there are excellent prospects for expansion in continental Europe to allow
us to build upon our initial investment in Fualsa in Spain.
'We remain confident of our ability to continue to deliver on our strategy.'
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
Tom Leatherbarrow
NORTHGATE PLC
PRELIMINARY RESULTS ANNOUNCEMENT
FOR THE YEAR ENDED 30 APRIL 2003
CHAIRMAN'S STATEMENT
The current financial year has seen your Company make significant progress with
its five year Strategy for Growth for the UK announced in 1999, its plans to
expand into the continental European market with an initial 40% investment in
Furgonetas de Alquiler SA ('Fualsa') in Spain and the strengthening of the
management structure for the Group as a whole.
Earnings per share have more than doubled since the commencement of our five
year Strategy for Growth, increasing from 19.1p to 41.4p. This represents a 21%
per annum compound growth rate over the four year period. Furthermore the 69%
growth in fleet during this same period has been achieved with an increase in
gearing of only 9% to a current level of 175%. This gearing level is after an
initial payment of £10.2m for Fualsa, being our first European investment.
Interest cover remains at a healthy 3.4 times.
The UK remains the core of our business now and will continue to be so in the
future. In order to ensure our ongoing success in this business, in January 2003
we appointed Phil Moorhouse, previously Group Finance Director, to the newly
created position of Managing Director UK Rental. This appointment underpins our
intention to remain the UK's largest vehicle rental company, providing first
class service to our customers.
Our plan to expand into continental Europe has been well flagged over recent
years. It is our policy to proceed cautiously with this expansion with the aim
of delivering steady, sustainable growth from this area of our business. To
this end, in respect of our initial investment in Spain and with the support of
the vendors, we have transferred a number of senior managers from Northgate to
Fualsa on a permanent basis and have made senior appointments locally. Our
objective is to ensure a smooth assimilation of the business prior to 31 May
2004, when we are required to make the final decision on the exercise of the
next option on shares in Fualsa, which would raise our stake to 80% and which
would oblige us to purchase the remaining 20% by May 2006.
The Directors are recommending a final dividend of 11.1p which, if approved by
shareholders at the Annual General Meeting, would make a total for the year of
16p, an increase of 6.7%. This is in line with the Board's progressive dividend
policy.
We place a great deal of emphasis in creating the right management structure in
each of our divisions. Furthermore we seek to provide proper training and
incentives for the management with adequate reward should they achieve the goals
set by the Board. During the financial year the Remuneration Committee has
undertaken a review of salaries in respect of senior executives and is also
proposing a new incentive scheme for management as detailed in the Remuneration
Report. These proposals are in keeping with the requirement to retain and
motivate senior management, but they are also an incentive that requires a
continuation of management's total commitment to the progress of your Company.
In January we appointed Gerard Murray, a senior executive with significant
experience in the automotive industry, as Group Finance Director. We have
already felt the benefit of his ability and experience.
Your Board has determined the Strategy for Growth for the Company through to
2006. More details of this can be found in the Operational Review by the Chief
Executive, which follows my statement. In pursuing this Strategy for Growth
shareholders can be assured that the underlying philosophy of the Board, which
is to manage the Company's assets prudently with the aim of delivering long term
sustainable growth, will remain core to all our decisions.
As always I thank my fellow Directors and all members of staff for their efforts
on behalf of shareholders, and I thank you, the owners, for your support.
Michael Waring
Chairman
OPERATIONAL REVIEW
Five Year Strategy for Growth
This report covers the fourth year of our five year Strategy for Growth
announced in 1999, the overall aim of which was to double the size of the
business.
As the table below demonstrates, in terms of the key measure of profitability,
namely earnings per share, this has been achieved one year ahead of plan.
30 April Fleet size Hire locations Basic e.p.s.
1999 26,600 30 19.1p
2003 45,000 70 41.4p
We informed shareholders in our interim report to 31 October 2002 that we had
achieved more vehicles per location than originally envisaged and that, as a
consequence, we could operate a 50,000 vehicle fleet from a smaller number of
outlets than the 100 estimated. This improved operational gearing has produced
a larger profit per vehicle than forecast in 1999 and has made a significant
contribution to the 117% increase in earnings per share in the four years to 30
April 2003.
The five year Strategy for Growth was focused solely on the development of our
business in the UK. On 16 July 2002, we purchased 40% of the equity of Fualsa,
the second largest van rental company in Spain and, as a consequence, now have
our first operational involvement in continental Europe.
Having doubled the Group's earnings per share since 1999 and made our first step
into Europe, we have concluded that it is important to set out to shareholders
our new Strategy for Growth covering the three year period to April 2006. Over
the past four years we have had positive feedback from shareholders on our
policy of communicating the broad parameters of our forward strategy and, within
our financial results, reporting the progress that we have made. We therefore
intend to follow a similar policy for our strategic plan to April 2006, broad
details of which are set out towards the end of this operational review.
Review of Current Period
Depot network
During the year we opened new branches in Andover, Grimsby, Northampton and
Telford. The acquisition of Target Vehicle Rental Limited on 1 October 2002
added 1,100 vehicles and six new locations in the area along the M40 corridor.
We continue to examine our hire company structure both in terms of improving
customer service and reducing the cost base and, where appropriate, we will take
the necessary steps to improve efficiencies in both areas. For example, we have
merged three hire companies in Newcastle to form one large hire company and a
branch, resulting in one less location in that city.
As a result of the above, we closed the year operating from a network of 70
locations.
Vehicle fleet
Although fleet growth, at 11.1%, was in line with our expectations for the year
as a whole, this was all achieved in the period to 31 October 2002, an imbalance
we did not anticipate. This was due to the economic uncertainty in the early
part of 2003, to which we referred in our pre-close trading statement issued on
2 May 2003. The quieter trading we experienced in January and February,
combined with our relentless focus on utilisation, necessitated a reduction in
the fleet of 1,500 vehicles in those months. Modest growth in the business
resumed from mid March allowing the fleet to reach its year end level of 45,000.
Utilisation
As referred to above, our focus on this area remains undiminished and, once
again, we can report an average utilisation for the year of 90%. Utilisation
analysed between mature locations, being those open for longer than 24 months
and those not yet mature, is 90.3% and 85.1% respectively.
Hire rates
Our marketplace remains competitive but, as a result of our excellent customer
service levels, we have not needed to reduce hire rates. When combined with no
increase in the purchase cost of new vehicles and a low interest rate
environment, this has ensured the core operating margin of the business has also
remained stable. The factors causing the reduction in the reported operating
margin are set out in the financial review.
Used vehicle sales
As predicted in last year's operational review, the residual market remained
stable during the year and we were able to achieve a profit on used vehicle
sales in each month of the year. Our outlook for this area of our business
remains positive.
Complementary non-rental products
We announced last year the development of a number of vehicle related,
non-rental products through our Norfleet division; in particular, that we had
commenced offering a telematics product, the provision of discounted vehicle
parts and mobile servicing for customers who have their own fleets as well as
renting from us. Although still in their infancy each of these products has
been well received by our customers and they are making a valuable, albeit
modest, contribution to the Group's performance.
In preparation for our next period of growth, we have now merged these Norfleet
activities with our 'Central Reservations' unit and our 'Wannavan.com' business
to form Northgate Vehicle Solutions. This division will now be responsible for
the development of both our existing and future non-rental business.
Fualsa (Spain)
Our first step into Europe has, to date, been better than our expectations and
we are satisfied with Fualsa's trading performance in the ten months since our
investment.
Since acquiring our 40% investment, the fleet has increased by 20% to 12,000;
the network has been extended to eight hire sites, with an additional location
in Barcelona, and a new site in Malaga; utilisation for the ten months averaged
88.7%. Fualsa contributed positively to earnings during the ten months of our
investment, with Northgate's share of profit before tax and goodwill
amortisation being £1.97m.
Future Strategy for Growth
In March 2003, the Board approved a new three year Strategy for Growth for the
Company based around three key areas of the business - UK Rental, Spain and
non-rental products. This period takes us to April 2006, close to the point of
time when our option to acquire full control of Fualsa, our Spanish rental
business, lapses.
As indicated in the Chairman's Statement in our interim report for the six
months ended 31 October 2002, we remain firmly of the view that the UK market is
far from mature and that there remains significant potential for us to continue
to grow our UK business.
In addition, our strategic investment in Fualsa has provided a platform for
significant expansion in what is a relatively immature market in Spain.
Finally, the creation of Northgate Vehicle Solutions offers a means for the
development of non-rental but vehicle-related products to be sold to our diverse
customer base.
In terms of development, the plan is based on us achieving the following targets
by April 2006:
• Fleet size of 60,000 in the UK and 18,000 in Spain
• Network of 100 locations in the UK and 20 in Spain
• 100% ownership of Fualsa
• An established portfolio of non-rental products
The last four years' results to 30 April 2003 represent a 21% annual compound
growth in earnings per share. We are seeking to achieve double-digit annual
growth in earnings per share through the successful implementation of the new
plan.
We look forward to continuing to take your Company forward and to updating you
on our progress against the targets set during the reporting periods of the
plan.
FINANCIAL REVIEW
Financial Reporting
Sales, Margins and Return on Capital
Turnover increased by 21.6% to £337.9m (2002 - £277.8m) excluding turnover from
the Fualsa joint venture. Hire company turnover increased by 16% and turnover
from sales of used vehicles by 38%. Operating profits excluding any
contribution from the Fualsa joint venture increased by 7.2% to £48.3m (2002 -
£45.1m) representing an operating margin of 14.3% (2002 - 16.2%).
The factors that caused the reduction in operating margin during the year were
broadly the turnover mix between hire revenue and used vehicles sales, a number
of non recurring costs and the continued investment in the Group's network.
As highlighted above the Group's turnover from the sale of used vehicles has
increased more than the corresponding increase in hire revenues. Used vehicle
sales generates the lowest operating margin for the Group since our ongoing
objective is to remain around break even in this activity. The larger increase
in used vehicle turnover has had the effect of reducing the Group's overall
operating margin by 0.5%.
During the year the Group incurred increased operating costs in the form of
goodwill amortisation (£0.38m), reorganisation expenses (£0.3m) as the Central
Reservations Operation was relocated to Darlington and increased insurance
premiums (£0.4m). The aggregate effect of these costs was to reduce the Group's
operating margin by 0.3%. The goodwill amortisation charged to operating
profits will reduce to £0.07m in future years and the CRO relocation costs will
not be incurred again.
Finally the operating margin has also been reduced as a result of the continuing
investment in the Group's depot network. The Directors believe that fleet
growth in immature locations during the next couple of years will reverse this
short term margin dilution.
The operating margin reported by Fualsa is slightly ahead of the Group's UK
operations. This result is attributable to the 20% fleet growth, mainly from
existing sites, during the ten months since the joint venture investment was
made. The medium term view is that overall operating margins in the Spanish
market will be broadly similar to those achieved in the UK.
Profit before tax has increased by 15.5% to £36.6m (2002 - £31.7m) and includes
an exceptional property profit of £0.7m and goodwill amortisation of £0.6m.
Return on capital employed, calculated as operating profit divided by average
capital employed (being shareholders' funds plus net debt) is 12.9% (2002 -
12.7%).
Return on equity, calculated as profit after tax divided by average
shareholders' funds is 17.3% (2002 - 16.6%).
Taxation
The Group's UK operations have a total tax charge of 31.4% which is slightly
higher than the standard rate of 30%. This is due to disallowable expenditure
incurred within the business, comprising non-qualifying depreciation, goodwill
amortisation and business entertaining. The joint venture tax rate at 25% is
below the standard Spanish tax rate of 35% because of tax concessions that are
available to the Fualsa business.
Dividend
The Directors recommend a final dividend of 11.1p per share (2002:10.35p),
making a total for the year of 16p (2002:15p) - an increase of 6.7%. The
dividend is 2.6 times covered (2002: 2.4 times).
Earnings per Share
Earnings per share increased by 15.6% to 41.4p (2002 - 35.8p).
Earnings per share have been calculated in accordance with FRS14. The weighted
average number of shares in issue during the year has been amended to reflect
that the Ordinary shares held by Kleinwort Benson (Guernsey) Trustees Limited
for the Northgate All Employee Share Scheme and the Long Term Incentive Plan do
not count towards the weighted average number of shares until they rank for
dividend.
Investments
On 16 July 2002 the Company acquired 40% of Fualsa, a leading commercial vehicle
rental company in Spain, for a consideration of £10.2m. This investment has
been treated as a joint venture within the Group's accounts to reflect the fact
that the Company has joint management control of Fualsa and is disclosed in the
consolidated balance sheet as 'Investment in joint venture'. The Company has an
option to acquire the remaining 60% of Fualsa: 40% being exercisable no later
than May 2004 and the remaining 20% no later than May 2006. The maximum total
consideration for the additional share capital of Fualsa is €37m.
During the year the Group acquired 100% of two UK vehicle hire operations for a
total cash consideration (net of cash acquired) of £4.5m.
Ordinary shares of the Company have been acquired in the open market by
Kleinwort Benson (Guernsey) Trustees Limited in order to satisfy the Company's
obligations under the Northgate All Employee Share Scheme and under the Long
Term Incentive Plan. These shares are included within the Group's balance sheet
as investments.
Goodwill
The Group amortises goodwill acquired over its useful life to a maximum of 20
years. The goodwill that has been paid for the Fualsa joint venture and for
Target Vehicle Rental Limited, one of the UK rental businesses acquired, is
being amortised over 20 years. This gives rise to a goodwill amortisation charge
to 30 April 2003 of £0.24m and an ongoing annual charge relating to these
acquisitions of £0.3m in future years of which £0.07m will be charged to
operating profits and £0.23m against the share of joint venture profits. The
ongoing charge excludes any goodwill that may arise should the Company exercise
its option to acquire additional share capital in Fualsa. Further goodwill of
£0.34m paid for UK businesses acquired and then immediately absorbed into
existing hire companies has been amortised in full.
Capital Structure
The Group's total gearing is 175% (2002 - 170%) of shareholders' funds which the
Board views as modest considering the business activity of the Group. This
gearing ratio is calculated after taking into account net cash balances of
£31.5m (2002 - £26.1m). The Group's borrowings are in the form of hire purchase
obligations (£242.4m), vehicle related loans (£46.8m) and a bank overdraft
(£10.7m). The hire purchase and the vehicle related loans are used to finance
the Group's vehicle fleet (£367m). As at 30 April 2003 the Fualsa joint venture
had £18.9m of shareholders' funds and £65.3m of net debt.
Treasury
Cash Flows
The Group's net debt increased by 15% to £268.4m (2002 - £232.9m) reflecting the
continued fleet growth in the UK of 11.1% to 45,000 units (2002 - 40,500), net
cash consideration of UK acquisitions totalling £4.5m, existing debt of £11.5m
acquired within UK acquisitions and the £10.2m investment in the Fualsa joint
venture. Gross cash generation remains strong with EBITDA increasing by 12% to
£148m (2002 - £132m).
Interest Costs
The Group's net interest costs have increased by 12% to £15.0m (2002 - £13.4m).
This increase includes the Group's share of interest costs in the joint venture
of £0.8m leaving an underlying increase of 6% in interest costs in the UK
business. This underlying increase in interest costs is lower than the growth
in net debt reflecting the fact that UK interest rates continued to fall during
the financial year and the Group has been a beneficiary of this fall. The
Group's interest cover remains healthy at 3.4 times (2002 - 3.4 times).
Strategy
The Group's financing strategy has been approved by the Board. This strategy is
to use medium and long-term debt to finance the Group's vehicle fleet, other
capital expenditure and acquisitions. Working capital is funded by internally
generated funds and an overdraft facility. The Group's interest rate exposure
is managed by a series of treasury contracts as described below.
Treasury Management
Each of the Group's operations is responsible for its own day-to-day cash
management. The funding arrangements with asset finance companies are
negotiated and monitored centrally on behalf of the operations. All funds
generated by the Group's operations, with the exception of Fualsa, are
controlled by a central treasury function.
Interest Rate Management
The Group has historically managed its interest rate risk by having in place a
number of financial instruments covering 30-40% of its total borrowings. As
interest rates have continued to fall some of the earlier financial instruments
are at levels 2-4% above the prevailing rates. Subsequent to the financial year
end the Group has entered into additional interest rate swaps for five year
terms to cover £45m of debt at an average rate of 3.97 %. Furthermore five year
interest rate collars covering £55m of debt with a spread of 3.15% to 5.5%, have
also been taken out.
Liquidity Risk
The finance facilities that are available to the Group are in excess of £454m
compared to net debt of £268m. These facilities comprise hire purchase funding,
revolving loans and overdraft secured primarily against the value of the vehicle
hire fleet. The revolving loans comprising 16% of the total facilities are
arranged on a rolling three year basis. These loans are the only element of the
Group's facilities that are subject to covenants. The main covenant of interest
rate cover is comfortably achieved with the Group's existing cover.
Consolidated Profit and Loss Account
for the year ended 30 April 2003
Before goodwill Goodwill Total Total
amortisation and amortisation and
exceptional exceptional
items items
Notes 2003 2003 2003 2002
£000 £000 £000 £000
Turnover
Continuing 337,875 - 337,875 277,829
operations
Acquired 14,514 - 14,514 -
joint
venture
Turnover :
Group and
share of
joint
venture 352,389 - 352,389 277,829
Less :
share of
joint
venture's
turnover (14,514) - (14,514) -
Group 337,875 - 337,875 277,829
turnover
Cost of (250,213) - (250,213) (202,315)
sales
Gross 87,662 - 87,662 75,514
profit
Administrative expenses
- general (38,999) - (38,999) (30,455)
administrative
expenses
- goodwill - (384) (384) (4)
amortisation
Total (38,999) (384) (39,383) (30,459)
administrative
expenses
Group 48,663 (384) 48,279 45,055
operating
profit -
continuing
operations
Share of 2,817 (197) 2,620 -
joint
venture's
operating
profit
51,480 (581) 50,899 45,055
Profit on - 736 736 -
disposal of
property
Interest (15,032) - (15,032) (13,381)
payable, net
Profit on
ordinary
activities
before 36,448 155 36,603 31,674
taxation
Tax on (11,497) (9,953)
profit on
ordinary
activities
Profit for 25,106 21,721
the
financial
year
Dividends (9,736) (9,119)
Profit 15,370 12,602
transferred
to reserves
Earnings 1 41.4p 35.8p
per
Ordinary
share -
basic
Diluted 1 41.2p 35.6p
earnings
per
Ordinary
share
Dividends 16.0p 15.0p
per
Ordinary
share
Statement of Total Recognised Gains and Losses
for the year ended 30 April 2003
2003 2002
£000 £000
Profit for 25,106 21,721
the
financial
year
Foreign 626 -
exchange
differences
25,732 21,721
Balance sheets
30 April 2003 Group Company
Notes 2003 2002 2003 2002
£000 £000 £000 £000
Fixed
assets
Intangible 1,382 142 - -
assets
Tangible
assets
Vehicles 366,976 325,116 - -
for hire
Other fixed 21,574 19,076 2,188 1,932
assets
Investments 409 590 79,050 70,161
390,341 344,924 81,238 72,093
Investment
in joint
venture:
share of 38,450 - - -
gross assets
share of (30,898) - - -
gross
liabilities
goodwill on 4,529 - - -
investment
less
amortisation
12,081 - - -
Total fixed 402,422 344,924 81,238 72,093
assets
Current
assets
Stocks 10,328 8,028 - -
Debtors 57,270 54,925 19,455 26,465
Cash at 31,545 26,125 29,792 24,537
bank and in
hand
99,143 89,078 49,247 51,002
Creditors: 185,758 149,754 12,909 12,844
amounts
falling due
within one
year
Net current (86,615) (60,676) 36,338 38,158
(liabilities)
assets
Total 315,807 284,248 117,576 110,251
assets less
current
liabilities
Creditors:
amounts
falling due
after more
than
one year 155,592 142,031 - -
Provisions 7,005 5,170 (6) (65)
for
liabilities
and charges
153,210 137,047 117,582 110,316
Capital and
reserves
Called up 3,545 3,542 3,545 3,542
share
capital
Share 45,635 45,471 45,635 45,471
premium
account
Revaluation 23 23 - -
reserve
Merger 4,721 4,721 417 417
reserve
Profit and 99,286 83,290 67,985 60,886
loss account
Shareholders' 153,210 137,047 117,582 110,316
funds
Attributable 152,710 136,547 117,082 109,816
to equity
shareholders
Attributable 500 500 500 500
to
non-equity
shareholders
153,210 137,047 117,582 110,316
The accounts were approved by the Board of Directors on 1 July 2003
Consolidated Cash Flow Statement
for the year ended 30 April 2003
Note 2003 2002
£000 £000
Cash inflow (i) 150,896 127,057
from
operating
activities
Returns on (13,847) (13,265)
investments and
servicing of finance
Taxation (11,869) (7,250)
Capital
expenditure
Purchase of (216,858) (172,603)
vehicles
for hire
Sale of 95,341 68,866
vehicles
for hire
Other (3,457) (6,173)
items, net
Net cash
outflow
from
capital
expenditure
and
financial
investment (124,974) (109,910)
Acquisitions (ii) (14,672) (6,150)
Equity (9,240) (8,631)
dividends
paid
Cash inflow (23,706) (18,149)
before use
of liquid
resources
and
financing
Management
of liquid
resources
Cash (191) 39
(placed on)
withdrawn
from deposit
Financing
Issue of 167 153
Ordinary
shares (net
of expenses)
Increase in (7,226) (1,735)
borrowings
Capital (170,458) (133,091)
element of
vehicle
related
hire
purchase
payments
Cash inflow from 199,254 166,258
new vehicle
related hire
purchase
agreements
Net cash 21,737 31,585
inflow from
financing
(Decrease) (2,160) 13,475
increase in
cash for
the year
Notes to the Consolidated Cash Flow Statement
(i) Reconciliation of operating profit to net cash inflow from operating activities
2003 2002
£000 £000
Operating 48,279 45,055
profit
Depreciation 99,691 86,912
Goodwill 384 4
amortisation
Loss on 3 10
sale of
equipment
and other
fixed assets
Increase in (2,124) (1,329)
stocks
Increase in (1,557) (4,429)
debtors
Increase in 6,220 834
creditors
Net cash 150,896 127,057
inflow from
operating
activities
(ii) Acquisitions
Investment 10,170 -
in joint
venture
(see Note
2(a))
Acquisition of 4,502 746
subsidiary
undertakings (see
Note 2(b))
Acquisition - 5,404
of a
business
14,672 6,150
Notes
1. Earnings per share
The calculation of basic earnings per Ordinary share in respect of the year to
30 April 2003 is based on the profit attributable to equity
shareholders of £25,081,000 (2002 : £21,696,000) and the weighted
average of 60,646,882 (2002 : 60,560,376) Ordinary shares in issue (excluding
those shares held by an employee trust in connection with the
Goode Durrant Long Term Incentive Plan and the All Employee Share
Scheme).
Diluted earnings per Ordinary share have been calculated on the basis of
earnings described above and assume that 102,000 shares (2002 :
162,500) remaining exercisable under the Goode Durrant Share Option
Scheme had been fully exercised at the commencement of the relevant period, such
that the weighted average number of shares is 60,893,447 (2002: 60,876,578)
(including those shares held by an employee trust in connection with the Goode
Durrant Long Term Incentive Plan and the All Employee Share Scheme).
2. Acquisitions
(a) Joint Venture
On 16 July 2002 the Group acquired a 40% share in Furgonetas de Alquiler SA
('Fualsa'), a business in Spain, for a cash consideration of
£10,170,000 including goodwill of £4,726,000. The investment is
accounted for as a joint venture. The goodwill on the investment in Fualsa is
capitalised and amortised over a period of 20 years being the
estimated useful economic life.
£000
Provisional 5,444
fair value
of net
assets
acquired
Goodwill 4,726
Acquisition 10,170
cost (including
fees)
Satisfied by cash 10,170
(b) Subsidiary undertakings
On 1 October 2002 the Group acquired the entire issued share capital of Target
Vehicle Rental Limited ('Target') for a cash consideration of
£3,768,000 including goodwill of £1,424,000. On 1 July 2002 the
Group acquired the entire issued share capital of KW Sadler Car Hire
(Cleethorpes) Limited ('KWS') for a cash consideration of
£1,134,000 including goodwill of £200,000. The goodwill on the acquisition of
Target is capitalised and amortised over a period of 20 years being
the estimated useful economic life. The goodwill on the acquisition
of KWS has been amortised in full as the business was immediately
absorbed into existing hire companies.
Target KWS Total
£000 £000 £000
Fair value 2,344 934 3,278
of net
assets
acquired
Goodwill 1,424 200 1,624
Acquisition 3,768 1,134 4,902
cost
(including
fees)
Satisfied 3,768 1,134 4,902
by cash
Cash (373) (27) (400)
equivalents
in
subsidiary
undertakings
purchased
Cash 3,395 1,107 4,502
outflow on
acquisition
of
subsidiary
undertakings
3. Reconciliation of movements in shareholders' funds
2003 2002
£000 £000
Profit for 25,106 21,721
the
financial
year
Dividends (9,736) (9,119)
15,370 12,602
Issue of 167 153
Ordinary
share
capital
Foreign 626 -
exchange
differences
16,163 12,755
Opening
shareholders'
funds
As 137,047 123,427
previously
reported
Prior - 865
period
adjustment
As restated 137,047 124,292
Closing 153,210 137,047
shareholders'
funds
4. Basis of preparation
The results have been prepared on the basis of the accounting policies set out
in the last annual report and accounts together with the new
policy adopted during the year relating to the investment in the
joint venture.
The results for the years to 30 April 2003 and 30 April 2002 and the balance
sheets at those dates are abridged. Full accounts for these
periods have been prepared on which the Auditors of the Company have
made unqualified reports and which did not include a statement under Section
237 (2) or (3) of the Companies Act 1985. The Accounts for the
year ended 30 April 2002 have been delivered to the Registrar of
Companies.
The Report and Accounts will be mailed to shareholders not later than 18 July
2003.
Michael Waring Chairman
Gerard Murray Finance Director
This information is provided by RNS
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