Interim Results

Northgate PLC 10 January 2002 NORTHGATE PLC Thursday, 10 January 2002 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2001 Northgate plc, the UK's leading specialist in light commercial vehicle hire, announces its interim results for the half year to 31 October 2001. Highlights * Continued strong performance in face of difficult economic conditions * Turnover increased by 5% from £129.7m to £136.5m. * Operating profits increased by 8% to £23.3m (2000: £21.6m). * Pre-tax profits up by over 16% to £16.2m (2000: £13.9m) * EPS up by 15% to 18.3p (2000: 15.9p). * Dividend increased by 5.7% to 4.65p (2000: 4.40p). * Fleet utilisation remains at an average of 90%. * On target for 60 locations by 30 April 2002. Michael Waring, Chairman, commented: 'I am pleased to report another excellent performance for the six months to 31 October 2001. Despite difficult economic conditions over the last six months, we have continued to make excellent progress. The robust nature of the Northgate business is demonstrated by increased turnover, healthy profits and an improved return for our investors. We have also further expanded the geographic coverage of the business. The traditional drivers of the business remain strong. Fleet utilisation has averaged 90%. Hire rates have been maintained despite a low interest rate and low inflation environment and we have generated an increased contribution from the disposal of used vehicles. We continue to believe there are still excellent growth prospects in the UK market. However, we are also examining opportunities to take the Northgate concept into Europe.' For further information, please contact: Northgate plc 01325 467558 Steve Smith, Chief Executive (On 10 January 2001: 0207 357 9477) Phil Moorhouse, Finance Director Hogarth Partnership Limited 020 7357 9477 Andrew Jaques Tom Leatherbarrow Notes to Editors Northgate plc rents light commercial vehicles to businesses from a network of hire companies throughout the UK and Ireland. Their NORFLEX product gives businesses access to a flexible and risk-free method to acquire as many commercial vehicles as they require. The company is currently half way through its five-year Strategy for Growth plan designed to double the size of the business. Further information regarding Northgate plc can be found on the Company's website: http://www.northgateplc.com Chairman's Statement to shareholders: We are now half way through our five year Strategy for Growth the goal of which is to double the size of Northgate's business by 30 April 2004. We remain firmly on track to deliver this goal. The business has continued its development and demonstrated its robust qualities while generating an improved return for investors, despite the difficult economic conditions during the last half year. Results Turnover increased by 5% from £129.7m to £136.5m. Operating profits increased by 8% to £23.3m (2000: £21.6m). Pre-tax profits were up by over 16% to £16.2m (2000: £13.9m). The result is an earnings per share up by 15% to 18.3p (2000: 15.9p). Once again, these results have been achieved without any increase in gearing which has actually reduced from 174% at 30 April 2001 to 166%. This confirms our contention that the strong cash flows generated by our business allow us to be self-funding at current levels of growth. Lower interest rates, in conjunction with this lower gearing, have benefited us through a reduced interest charge. Interest cover increased to 3.3 times (2000: 2.8 times). Dividend The Board has declared an interim dividend of 4.65p (2000: 4.40p) per share, an increase of 5.7%, payable on 9 February 2002 to shareholders on the register as at the close of business on 18 January 2002. Operational Review The network continues to expand and, since the year end, we have added locations in Aberdeen, Chester, Hunslett, Kendal, Morecambe, Rochdale and Scunthorpe, bringing our total number of active hire sites to 55. With further properties currently under negotiation, we expect to achieve our target of 60 locations by 30 April 2002. Coupled with the expansion of the network, continued demand for our rental product NORFLEX has resulted in the fleet increasing by 2,350 units to 38,450 vehicles as at 31 October 2001. Utilisation of the fleet remains tightly controlled and averaged 90% in the six month period. Despite both low interest rates and a low inflation rate, a combination which makes price increases difficult, we are pleased to report that we have been able to maintain hire rates at their year end levels and therefore not lost the progress made in the previous year. A stronger market for our used vehicles combined with the ongoing improvements made in the marketing of our used stock has led to an increased contribution from this area of operation. The markets We remain of the view that the UK market is far from mature and that we will continue to grow the fleet size beyond that envisaged in our five year Strategy for Growth. In our April 2001 operational review, we referred to research on the commercial vehicle rental market we had commissioned from Datamonitor and, in particular, to companies moving closer to the concept of 'usership' rather than 'ownership'. During the period, there has been speculation in the press that a number of substantial corporate fleets are examining alternative vehicle acquisition strategies. The format these deals finally take remains to be seen but this publicity has ensured businesses of all sizes will be made more aware of the benefits of outsourcing using a product such as NORFLEX. We are continuing to investigate opportunities in Europe to enable us to take our first step in that market and begin the process of replicating our success in the UK. However, as always, we will proceed with caution. People The commitment of our employees is a major contributor to our growth and we are delighted they are now afforded the opportunity to share in the rewards. In its first year of operation, some 26% of those employees eligible to join participated in our All Employee Share Scheme. For its second year, commencing in January 2002, this has increased to 38%, representing a significant proportion of our workforce who have a direct interest in the success of our business. Current trading and Outlook There is a high degree of uncertainty over the direction the UK economy will take in the next six months. In such a climate, the dynamics of a rental business, and particularly one with the flexibility of Northgate, are extremely attractive to both customers and investors alike. Trading since the end of the period is in line with expectations and we remain confident in our ability to grow the business in all areas and deliver our five year Strategy for Growth. Consolidated Profit and Loss Account for the 6 months ended 31st October 2001 Six Six Twelve months to months to months to Notes 31.10.01 31.10.00 30.4.01 Restated Restated (Unaudited) (Unaudited) £000 £000 £000 Turnover 1 136,466 129,661 261,801 Operating profit 1 23,307 21,645 42,569 Net interest payable (7,135) (7,789) (15,459) Profit on ordinary activities before taxation 16,172 13,856 27,110 Tax on profit on 2 (5,062) (4,240) (8,054) ordinary activities Profit for the 11,110 9,616 19,056 financial year Dividends (2,824) (2,692) (8,517) Profit transferred to 8,286 6,924 10,539 reserves Earnings per ordinary 3 18.3p 15.9p 31.0p share - basic Diluted earnings per 3 18.2p 15.8p 30.9p ordinary share Dividends per ordinary 4.65p 4.4p 14.0p share All current and prior year trading relates to continuing operations Statement of Total Recognised Gains and Losses for the 6 months ended 31st October 2001 Six Six Twelve months months months to to to 31.10.01 31.10.00 30.04.01 Restated Restated (Unaudited) (Unaudited) £000 £000 £000 Notes Profit for 11,110 9,616 19,056 the period Prior 5 865 period adjustment Total gains 11,975 recognised Summary Consolidated Balance Sheet 31st October 2001 31.10.01 31.10.00 30.4.01 Restated Restated (Unaudited) (Unaudited) £000 £000 £000 Fixed assets Tangible assets Vehicles for hire 312,787 294,883 302,473 Other fixed assets 18,106 13,525 15,880 Goodwill on 146 - - acquisition 331,039 308,408 318,353 Current assets Stocks 6,782 8,245 6,685 Debtors 54,318 52,666 51,296 Investments - 15 - Cash at bank and in 29,803 16,772 24,263 hand 90,903 77,698 82,244 Creditors: amounts 149,946 123,122 133,869 falling due within one year Net current (59,043) (45,424) (51,625) (liabilities)/assets Total assets less 271,996 262,984 266,728 current liabilities Creditors: amounts falling due after more than one year 133,592 136,307 136,620 Provisions for 5,821 6,013 5,816 liabilities and charges 132,583 120,664 124,292 Capital and 132,583 120,664 124,292 reserves Consolidated Cash Flow Statement for the 6 months ended 31st October 2001 Six Six Twelve months to months to months to 31.10.01 31.10.00 30.4.01 Restated Restated (Unaudited) (Unaudited) £000 £000 £000 Cash inflow from operating 64,405 52,646 117,388 activities Returns on investments and (6,754) (7,793) (15,266) servicing of finance Taxation (986) 1,480 695 Capital expenditure (55,351) (48,844) (95,926) Acquisitions (717) - - Equity dividends paid (5,813) (5,498) (8,166) Management of liquid 71 76 23 resources Financing 14,859 7,271 19,873 Increase/(decrease) in cash 9,714 (662) 18,621 for the year Reconciliation of Net Cash Flow to Movement in Net Debt Increase/(decrease) 9,714 (662) 18,621 in cash for the year Decrease/(increase) 9,195 16,928 26,968 in borrowings Capital element of vehicle related hire purchase payments 61,765 48,294 103,745 Cash inflow from (85,814) (63,254) (141,334) new hire purchase agreements Cash (withdrawn (71) (76) (23) from)/placed on deposit Change in net (5,211) 1,230 7,977 debt resulting from cash flows New hire purchase - (8,916) (8,916) obligations Hire purchase (228) - - obligations acquired with subsidiaries Movement in net (5,439) (7,686) (939) debt for the period Opening net debt (214,675) (213,736) (213,736) Closing net debt (220,114) (221,422) (214,675) Unaudited Notes 1. Segmental Analysis All trading activities relate to the business of vehicle hire. The group operates in all material respects in the United Kingdom and turnover relates to customers in the United Kingdom. 2. Tax The charge for taxation for the six months to 31 October 2001 is based on the estimated effective rate for the year. 3. Earnings per ordinary share The calculation of basic earnings per ordinary share in respect of the six months to 31 October 2001 is based on the profit attributable to equity shareholders of £11,097,000 (31.10.00 - £9,603,000) (30.4.01 - £19,031,000) and the weighted average of 60,532,803 (31.10.00 - 60,557,282) (30.4.01 - 60,578,305) ordinary shares in issue (excluding those shares held by an employee trust in connection with the group's Long Term Incentive Plan and All Employee Share Scheme). Diluted earnings per ordinary share have been calculated on the basis of the earnings described above and assume that 215,000 shares 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 60,872,393 (31.10.00 - 60,801,236) (30.4.01 - 60,837,249) (including those shares held by an employee trust in connection with the group's Long Term Incentive Plan and All Employee Share Scheme). 4. Notes to the Cashflow Statement (i) Reconciliation of operating profit to net cash flow from operating activities Six Six Twelve months to months to months to 31.10.01 31.10.00 30.4.01 Restated Restated (Unaudited) (Unaudited) £000 £000 £000 Operating 23,307 21,645 42,569 profit Depreciation 42,266 36,609 76,193 Increase in (1,168) (5,608) (1,384) working capital Other non-cash - - 10 items Net cash inflow 64,405 52,646 117,388 from operating activites (ii) Acquisition On 1 October 2001 the group acquired the entire share capital of Vickers (Northern) Limited for a final consideration of £776,000, including goodwill of £146,000. The impact on the results for the period is immaterial. 5. Reconciliation of Movements in shareholders' funds Six Six Twelve months to months to months to 31.10.01 31.10.00 30.4.01 Restated Restated (Unaudited) (Unaudited) £000 £000 £000 Profit for the 11,110 9,616 19,056 financial year Dividends (2,824) (2,692) (8,517) 8,286 6,924 10,539 Issue of 5 323 336 ordinary share capital 8,291 7,247 10,875 Opening shareholders funds As previously 123,427 112,804 112,804 reported Prior period 865 613 613 adjustment As restated 124,292 113,417 113,417 Closing 132,583 120,664 124,292 shareholders funds As a result of the adoption of Financial Reporting Standard 19 Deferred Taxation a prior period adjustment of £865,000 in respect of deferred tax assets has been incorporated in the preparation of these financial statements. The figures for the period to 31 October 2000 have been reclassified to reflect the impact of FRS15 as explained in the Annual Report & Accounts to 30 April 2001. 6. Basis of preparation The interim results have been prepared on the basis of the accounting policies set out in the last annual report and accounts as amended to reflect the adoption of FRS19. The cashflow statement amounts for capital expenditure and financing for the six months ended 31 October 2000 and the year ended 30 April 2001 have been grossed up by £63,254,000 and £141,334,000 respectively to more fully reflect the cash flows arising from refinancing through Hire Purchase agreements. Previously these amounts were shown net. There is no impact on net cashflow or net debt. The figures for the year ended 30 April 2001 are extracted from the audited accounts for that year which have been delivered to the Registrar of Companies, and on which the auditors issued an unqualified report and which did not include a statement under section 237 (2) or (3) of the Companies Act 1985.

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