(Alliance News) - Redde Northgate PLC on Tuesday reported a rise in revenue for financial 2020 but said that the UK government-imposed lockdown to combat the new coronavirus has resulted in a "steep" decline" in accident and incident volumes and a reduction in rentals.
The vehicle rental and services firm - created through the merger of peers Northgate PLC and Redde PLC - said that revenue for its financial year to April 30 were 5% higher than the year prior. The improvement was attributed to the performance of the Redde business with the Northgate business seeing revenue slide by 4%.
For financial 2019, Redde posted revenue of GBP589.7 million while Northgate posted revenue of GBP745.5 million
Redde Northgate said that until the end of February, underlying pretax profit margin was in line with expectations. However, underlying margin was hurt in March and April due to the worsening of the Covid-19 pandemic and the subsequent decline in trading volumes, the introduction of support schemes for customers, and the implementation of cost-cutting measures.
In March, the company announced a scheme to help customers retain their rental vehicle, with the scheme resulting in a revenue loss of around GBP3 million to GBP4 million each month. Despite the introduction of the scheme, the net number of vehicles returned from the beginning of lockdown up until the end of April was 6% in the UK & Ireland and 7% in Spain.
"I continue to be impressed by the effort of our colleagues who are committed to doing what is necessary, without fuss, in these difficult times. Our liquidity position has grown over the last two months and the business model has proven to be resilient during these times. For now, we are doing what is necessary to preserve cash, protect our financial position and to secure a long-term future for all our stakeholders," said Chief Executive Martin Ward.
In March, Redde Northgate announced measures to conserve cash including cutting board salaries, furloughing staff, curtailing spend and putting a freeze on recruitment and pay reviews.
As at the end of April, the company had available financial liquidity headroom of GBP234 million.
In a separate statement, Redde Northgate said on Monday that Non-Executive Director Steve Oakley died on Friday.
Oakley joined the board following the merger of Redde and Northgate in February. Prior to that, he was chief financial officer of Redde from 2011.
Shares in Redde Northgate were trading 3.7% higher at 181.20 pence each on Tuesday morning in London.
By Ife Taiwo; ifetaiwo@alliancenews.com
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Redde Northgate (REDD)