Solo CEO re-engaging with prospective Tanzania gas stake buyers in the coming weeks #SOLO Watch Now

Less Ads, More Data, More Tools Register for FREE

Pin to quick picksNorthgate Regulatory News (NTG)

  • There is currently no data for NTG

Watchlists are a member only feature

Login to your account

RNS Alerts are a premium feature

Login to your account

myTerminal is a premium feature

Login to your account

Don't have an account? Click here to register.

Final Results

Tue, 5th Jul 2005 07:01

Northgate PLC05 July 2005 5 July 2005 NORTHGATE PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2005 Northgate plc (the "Company", the "Group"), the UK's leading specialist in lightcommercial vehicle hire, announces its preliminary results for the year ended 30April 2005. • Turnover up 28.9% to £458.3m (2004 - £355.6m) • Operating profit up 26.2% to £75.7m (2004 - £59.9m*+) • Profit before tax and goodwill amortisation up 23.8% to £55.6m (2004 - £44.9m*) • Earnings per share up 17.8% to 59.7p (2004 - 50.7p*) • Total dividend increased by 13.6% to 20.0p (2004 - 17.6p) • UK fleet increased by 11.0% to 52,600 vehicles (2004 - 47,400) • Spanish fleet (Fualsa) increased by 26.7% to 19,000 vehicles (2004 - 15,000) *As restated for the application of UITF 17 (revised)+Includes share of joint venture operating profit Martin Ballinger, Chairman, commented: "I am pleased to report on these excellent results. In the year, our UK marketgrew strongly, with fleet and location increases across the UK. Our subsidiarycompany, Fualsa, confirmed our belief in the exceptional opportunity offered bythe vehicle rental market in Spain. The Company is currently updating its Strategy for Growth and we will bebuilding on Northgate's past success to ensure that we continue to deliverprogress through 2006 to 2009 and beyond" 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 | |-------------------------------------------------------------------------------- CHAIRMAN'S STATEMENT This is the first Annual Report Statement I have written as Chairman of yourCompany. I would like first to pay tribute to my predecessor, Michael Waring.Few could have foreseen the growth of the business achieved during the 20 yearsof his leadership. His skills and determination have helped the development ofthe Northgate business and in the formulation of its strategies, leaving it wellplaced to continue that growth in the future. I am, therefore, pleased to report on the Company's excellent results inMichael's last year at Northgate. Turnover for the year increased by 28.9% to£458.3m (2004 - £355.6m). Profit before tax and goodwill amortisation is up by£10.7m to £55.6m (2004 - £44.9m as restated). Earnings per share rose 17.8% to59.7p (2004 - 50.7p as restated). All provide further evidence of Northgate'sprogress towards the targets stated in the three year Strategy for Growth,taking the Company forward to April 2006. Based on these results and the Board's view of future prospects, the Board hasdecided to recommend to shareholders a final dividend of 12p per share. Thiswill make the total dividend for the year 20p - an increase of 13.6% on lastyear and it will be covered three times. The dividend will be payable on 30September 2005 to those shareholders on the register on 5 August 2005. Northgate's success is due in large part to its corporate culture. Its structureof separate businesses enables each local team to focus on the opportunities inits own area. Local relationships allow a diversified range of business sectorsand geographic areas in the customer base and ensure prompt attention to eachcustomer's needs on-site. The devolved management structure is complemented bycentral corporate functions to monitor and audit Health and Safety standards,asset management, performance and finance controls. Moreover, the centralisedvehicle purchasing and sales function, national accounts, marketing and sales,treasury and IT teams provide essential support to those local businesses. TheNorthgate culture yields a flexible, robust business model that continues tolead the field in commercial vehicle solutions. Northgate's UK business returned to strong growth in the year with its fleetadvancing 11% to 52,600 vehicles (2004 - 47,400). Whilst hire rates remainedcompetitive, the operational gearing effect of this larger fleet, coupled withutilisation averaging 90%, ensured the hire operating margin remained healthy at20.8% (2004 - 20.8% as restated). The residual market for used vehicle salesremained stable and the UK business was successful in its aim of achieving agreater proportion (up by 60%) of used vehicle sales through retail andsemi-retail channels. As a result, the operating profit per vehicle soldimproved to £205 (2004 - £189). Northgate's Spanish vehicle rental business, Fualsa, contributed its first fullyear as a wholly owned subsidiary. Its result underscores our belief in theexceptional opportunity afforded by the vehicle rental market in Spain. With afleet growth of 27% to 19,000 vehicles and a profit before tax of £9.9m in theyear, Fualsa is an excellent platform for further expansion in Spain. Fualsa'snetwork of 15 depot locations at 30 April 2005 has grown further to 17 depotssince the year end and is well on course to expand to 20 by April 2006. The Company is currently updating its Strategy for Growth to progress through2006 to 2009 and beyond. The growth of the business in Spain has indicated theattraction of further acquisitions in due course in mainland Europe. Clearly notevery EU country shares the growth in the sector experienced in Spain andNorthgate will consequently be very selective in its acquisition strategy.Northgate has also identified further consolidation opportunities in the UK. TheCompany is in a strong position to make such acquisitions and has an executiveteam with proven skills in integrating them into the Northgate business model.Strategic planning will also focus on opportunities for organic growth both inthe UK and in Spain, using the proven Northgate business model, adapted forlocal cultural realities. The Company's senior independent director, Ron Williams, has announced that heis to retire in September, being over 70 years of age and with a length ofservice of over nine years. He has been a great support to Michael Waring in thedevelopment of your Company and he has been invaluable to me, the incomingChairman. The Board will miss him greatly. We were joined in April by Tom Brown,a very experienced public company director, whose skills complement those ofother Board members. As the other 'new boy' I am very pleased to have joined theNorthgate team. The staff and management at local and corporate levels haveworked very hard to achieve these results, within the vision and leadership ofthe senior executives. The Board itself, executives and non-executives, have ablend of skills and experience that, I believe, will ensure Northgate willcontinue to deliver. It is a privilege to be part of that team. Since the end of the year we have experienced a weaker vehicle residual marketin the UK than in the prior financial year. In Spain, meanwhile, our fleetgrowth rates are higher than those planned. Despite the softer residual market and perceived weaknesses in the UK economy,the Board remains of the opinion that we should achieve further progress towardsour planned objectives in both the UK and Spain during the forthcoming year. Martin BallingerChairman OPERATIONAL REVIEW Three Year Strategy for Growth We are now reporting on the second year of our three year Strategy for Growththat was announced in July 2003. The strategy was based on achieving thefollowing 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; and •An established portfolio of non-rental products. In the summer of 2003 very low levels of interest rates and inflation combinedto give conditions that resulted in lower than expected fleet growth in the UK.Since September 2003 fleet growth has been more in line with our expectationswith growth of 11% in the year to April 2005. We do not, however, expect to makeup the shortfall in fleet growth which arose in 2003 and as such now anticipatehaving a UK fleet below our original target of 60,000 vehicles in April 2006.The fleet growth in Fualsa, our Spanish subsidiary, has, however, exceeded ourexpectations such that the closing fleet at April 2005 of 19,000 vehiclesalready exceeds the target for April 2006 of 18,000 vehicles. Through thesuccessful implementation of our strategy we were seeking to achieve annualdouble-digit earnings per share growth in each year of the plan. An increase inearnings per share of 22.9% in the first year of the plan, followed by a furtherincrease of 17.8% in the year to 30 April 2005 leaves us well placed to achievethat objective. Review of Current Year United Kingdom and Republic of Ireland The first half of our financial year usually represents the strongest period offleet growth and utilisation for the UK since the second half is impacted by asignificant number of vehicle returns in December and January as constructionand distribution sector customers adjust their vehicle requirements in line withholiday periods and seasonal demand. The year that we are reporting on is a goodexample of this cycle with 11% fleet growth for the year as a whole beingachieved but with 9.7% of this growth being in the first half of the financialyear and 1.3 % in the second. Depot Network As at 30 April 2005 we operated from 36 primary and 40 branch locations. We haveadded new locations in Wakefield, Kidderminster and Worcester since 1 May 2004 -the latter two being as a result of acquiring Foley Self Drive Limited on 1August 2004. Since the year end we have opened a new branch at Keighley andfurther branch openings at Chelmsford, Erith (Kent) and Hove are scheduled forthe next few weeks. These new branches will bring our network to a total of 80locations, 36 primary and 44 branches. As highlighted in previous years we will take the appropriate opportunities toconsolidate businesses where we feel this will lead to efficiencies withoutdetracting from customer choice and service. During the year Daman VehicleRental Limited, which was acquired in April 2004, was merged with MaincrestVehicle Hire Limited in the North West of England. One of the features of our growth over the past six years has been theachievement of our planned level of fleet growth through fewer locations thanwas originally envisaged as a result of the average fleet size per locationbeing greater than expected. This enhances the operating margin of the UK sincefixed costs are spread over a larger fleet. Some depots are, however,constrained from taking advantage of this operational gearing due to thephysical aspects of their location. We, therefore, have plans to relocate fourprimary locations to larger depots during the next financial year, thusincreasing the capacity of the network. Vehicle Fleet As highlighted above the historic pattern of fleet growth for the UK has beenone whereby there has been a stronger first half to the financial year than thesecond half. This year is no exception with growth of 4,600 vehicles from May toOctober 2004 of which 850 vehicles were as a result of the acquisition of FoleySelf Drive Limited on 1 August 2004. A further 1.3% growth in the fleet wasachieved in the second half of the financial year producing a closing fleet of52,600 vehicles (2004 - 47,400). Utilisation and Hire Rates Utilisation, which averaged 90% (2004 - 89%) for the year, remains the keymanagement tool within the business. As we outlined last July, our three year Strategy for Growth does not envisageany material improvement in hire rates, with increased profitability beingdriven in the main by growth in the fleet and cost efficiencies. Our interim report mentioned that hire rates had softened slightly both as aresult of localised competitor activity and our focus on fleet growth. Withregards to fleet growth, we continue to aim to win selected business fromcontract hire companies. Since this business tends to be lower mileage andlonger term, contract hire companies generally operate at the lower end of ourhire rate range. This new business has, therefore, contributed to a slightlyreduced average hire rate over the year but has improved profitability as aresult of operational gearing. Used Vehicle Sales We sold 17,700 vehicles (2004 - 18,700) during the year and at the same timeimproved the operating profit per vehicle sold to £205 (2004 - £189). Thisimprovement in margin is mainly driven by the sales mix since the market hasremained reasonably stable over both years. We have actively sought to increasethe proportion of vehicles sold through retail and semi-retail sales channelssince such disposals attract better margins. For the year ended April 2004 wesaw 6% of our disposals go through a refurbishment process into the semi-retailor retail channels, whereas for the year to April 2005 this has been increasedto over 10%. One of our objectives is to continue to increase this percentageover the next couple of years to around 15% of the Group's UK disposals. Inaddition to our Carnaby and Walsall remarketing centres we sell vehicles fromthree other dedicated sales locations in the UK - Darlington, Snodland in Kentand Banbury, as well as direct from selected hire locations. Non-rental products Although not the main focus of our business, we continue to build on theportfolio of products that we offer customers as ancillary services to ourrental product. In particular, we now have over 1,900 (2004 - 1,400) trackingunits installed on vehicles in our fleet. Fualsa (Spain) This is the first year that Fualsa has been included as a subsidiary of theGroup following the exercise of options to acquire the remaining equity ofFualsa on 3 May 2004. It has been another excellent year of progress with fleetgrowth of 27% and a profit before tax of £9.9m. During the year steps have beentaken to strengthen the management team with the appointment of a CommercialDirector and an Operations Director. We believe we have a strong and committedteam capable of taking advantage of the tremendous opportunity that exists inSpain. Depot Network The depot network as at 30 April 2005 comprised 15 locations as a result ofMurcia, Cadiz, Badojoz and Alicante opening during the financial year. Since theyear end, depots at Leon and Cordoba have opened bringing the total number oflocations to 17, well on track to achieve the objective of 20 locations set outin the three year Strategy for Growth. Vehicle Fleet Fleet growth during the year was 27% producing a closing fleet of 19,000vehicles (2004 - 15,000). This growth was evenly spread between the first andsecond half of the financial year since Spain does not have the same seasonalityof demand as the UK. The industrial sectors contributing to this growth continueto be in line with our existing customer profile with a bias towards theconstruction sector. With the appointment of the Commercial Director and theresultant marketing activity into other sectors, we are aiming to move to a morediversified customer base over the medium term. Utilisation and Hire Rates The overall utilisation rate improved to 89% (2004 - 88%) despite being heldback slightly by lower rates of utilisation as the network continues to expand.Of the 17 depots operated by Fualsa, nine have been opened during the last twoyears. Hire rates in Spain have been increasing at a modest rate of around 1% per annumfor the last couple of years. A large proportion of this increase is, however,funding increases in the capital cost of the fleet where price increases for newvehicles generally exceed the 1% hire rate improvement. Current Trading and Outlook Since our trading update on 3 May 2005, we have experienced a weaker vehicleresidual market in the UK than that experienced in the last financial year. As aconsequence, we currently expect to achieve a lower operating profit per unitcompared to the £205 per unit achieved in the financial year to 30 April 2005.We do, however, expect to achieve operating profits on disposal within ourtarget range of between plus or minus £100 per unit. Fualsa continues to achieve fleet growth rates higher than those planned. We remain of the opinion that we should make further progress during thefinancial year towards the objectives communicated in our three year Strategyfor Growth. FINANCIAL REVIEW Financial Reporting Sales, Margins and Return on Capital Group turnover increased by 28.9% to £458.3m (2004 - £355.6m) as a result of anincrease in UK turnover of 8.3% and the first time inclusion of Fualsa'sturnover that contributed £73.0m. United Kingdom & Republic of Ireland The composition of the Group's UK turnover and operating profit as between hireactivities and vehicle sales is set out below: 2005 2004 £000 As restated £000TurnoverHire 283,414 250,747Used vehicle sales 101,810 104,877 -------- ---------- 385,224 355,624 ======== ========== Operating profit Hire 58,968 52,143Used vehicle sales 3,632 3,533Goodwill amortisation (435) (71) -------- ----------UK Operating profit 62,165 55,605 ======== ========== Operating margins (excluding goodwill) UK overall 16.3% 15.7%Hire 20.8% 20.8%Used vehicle sales 3.6% 3.4% The UK's overall operating margin increased to 16.3% (2004 - 15.7%) mainly as aresult of hire representing a larger proportion of total operating profit thanin the prior year. UK hire turnover increased by 13%, reflecting increases inthe closing and average UK rental fleet of 11% and 12% respectively andgenerated the same operating margin of 20.8% (2004 - 20.8%) as the prior year.The operating profit generated from used vehicle sales has increased by £0.1mrepresenting an operating profit per vehicle sold of £205 (2004 - £189). Thenumber of vehicles disposed of during the year was in line with expectations ata similar level to the prior year at 17,700 vehicles (2004 - 18,700). Fualsa This is the first financial year that Fualsa has been reported within theGroup's results as a wholly owned subsidiary. The composition of Fualsa'sturnover and operating profit as between hire activities and vehicle sales isset out below: Subsidiary Subsidiary Joint venture (100%) (100%) (40%) 2005 2004 2004 £000 £000 £000 TurnoverHire 55,968 43,492 17,397Used vehicle sales 17,075 15,160 6,064 --------- --------- -------- 73,043 58,652 23,461 ========= ========= ======== Operating profitHire 13,170 8,835 3,534Used vehicle sales 1,027 2,610 1,044Goodwill amortisation* (681) - (236) --------- --------- --------Fualsa Operating profit 13,516 11,445 4,342 ========= ========= ======== Operating margins (excluding goodwill) Fualsa overall 19.4% 19.5% 19.5%Hire 23.5% 20.3% 20.3%Used vehicle sales 6.0% 17.2% 17.2% *Goodwill amortisation arises on consolidation of Fualsa in the current year andaccounting for Fualsa as a joint venture in the prior year. Fualsa's hire turnover increased by 28.7%, in line with the rental fleetincrease of 27%. Hire margins have improved to 23.5% (2004 - 20.3%), reflectingfleet growth that has generated operational gearing benefits. This is despite acontinued investment programme in new locations throughout Spain, with four newlocations opening during the financial year. The overall operating margin of19.4% (2004 - 19.5%) is similar to the prior year even though 2004 had beenenhanced by £1.75m of non-recurring profits on vehicle disposals of which theGroup's share was estimated to be £0.7m for the year. Group Group return on capital employed, calculated as Group operating profit dividedby average capital employed (being shareholders' funds plus net debt), is 14.2%(2004 - 13.9%). Group return on equity, calculated as profit after tax divided by averageshareholders' funds, is 19.0% (2004 - 18.3%). Prior year adjustments Prior year adjustments have been made to reflect accounting policy changesfollowing the adoption of Urgent Issues Task Force Abstract ("UITF") 38 andUITF17 (revised), both with effect from 1 May 2004. UITF38 is in respect of investments in own shares. The impact of this change isto reduce both fixed asset investments and shareholders' funds by £1,330,000 at30 April 2004. There is no impact on the consolidated profit and loss accountfor either year. UITF17 (revised) is in respect of shares granted to employees. The impact ofthis change is to increase administrative expenses and reduce profit aftertaxation by £191,000 in the current year and by £141,000 in the prior year.Within the consolidated cash flow statement, the Group operating profit isreduced by the same amounts for the respective years but there is no effect onthe net cash inflow from operating activities in either year. There is no changeto the profit and loss reserve in either year. Taxation The Group's UK operations have a total tax charge of 31% (2004 - 31%) which isslightly higher than the standard rate of 30% due to disallowable expenditureincurred within the business. The Fualsa tax rate of 20% (2004 - 12%) is below the standard Spanish tax rateof 35% because of tax concessions based on vehicle purchase reliefs that areavailable to the business. As was outlined last year it remains the case that aslong as these tax concessions are available it is likely that the tax rate forFualsa will remain below the standard rate. The tax rate for future years isanticipated to remain in the range of 20% to 30% of profit before tax ratherthan the very low rate of 2004. Dividend The Directors recommend a final dividend of 12.0p per share (2004 - 10.6p)giving a total for the year of 20.0p (2004 - 17.6p), an increase of 13.6%. Thedividend is covered three times (2004 - 2.84 times). Earnings per Share Earnings per share increased by 17.8% to 59.7p (2004 - 50.7p as restated),reflecting the increase in profit after tax of 23% and the full year effect of3.04m new shares issued as a result of a 5% Cash Placing on 14 January 2004. Basic earnings per share have been calculated in accordance with FRS14. Theweighted average number of shares in issue during the year has been amended toexclude those Ordinary shares held by Walbrook Trustees (Guernsey) Limited andCapita IRG Trustees Limited for the Company's various share schemes until suchtime as they rank for dividend. Investments On 3 May 2004 the Company exercised its option to acquire a further 40% of theequity of Fualsa for the maximum consideration of £15.1m. On the same date theCompany also exercised its option to acquire the final 20% of Fualsa's sharecapital. The consideration for this exercise is, however, deferred until 2006and will be dependent on the profit after tax of Fualsa for the calendar years2004 and 2005. The maximum amount of deferred consideration payable under theterms of the Share Purchase Agreement is €14.9m. This amount has been used tocalculate the cost of the investment in Fualsa and the resultant goodwill. Inprior years this investment has been treated as a joint venture within theGroup's accounts but with effect from May 2004 it has been accounted for as asubsidiary undertaking of the Group. On 1 August 2004 the Group acquired 100% of Foley Self Drive Limited, a UKvehicle hire operation based in the West Midlands, for a total cashconsideration (including the bank overdraft acquired) of £4.4m. Ordinary shares of the Company have been acquired in the open market by WalbrookTrustees (Guernsey) Limited and Capita IRG Trustees Limited in order to satisfythe Company's obligations under its various share schemes. These shares areincluded within the Group's balance sheet within the own shares held reserve. Goodwill The Group amortises goodwill acquired over its useful life up to a maximum of 20years. The goodwill that has been paid for the initial 40% equity in Fualsa andthe goodwill arising following the exercise of the options over the remainingshare capital of Fualsa on 3 May 2004 is being amortised over 20 years from thedate of the initial investment in July 2002. This gives rise to a goodwillamortisation charge in the year of £0.7m relating to Fualsa. Further goodwill amortisation of £0.4m was charged to the profit and lossaccount relating to UK businesses. Capital Structure As at 30 April 2005 the Group's total gearing increased to 203% (2004 - 137%).The prior year comparative for gearing has been amended from 132% to reflect ourdecision that the gearing ratio going forward will be calculated as net debt(including cash balances) as a percentage of shareholders' funds but after thededuction of goodwill. The net cash balance taken into account in calculatingthe gearing ratios for this year is £41.4m (2004 - £46.2m). The significant increase in gearing is in line with our expectations and ismainly due to the first time consolidation of Fualsa's balance sheet and thefunding of fleet growth in the UK and Spain of 11% and 27% respectively duringthe financial year. Treasury Cash Flows The Group's net debt increased by 64% to £410.4m (2004 - £249.8m) reflecting theconsolidation of Fualsa and the funding of fleet growth in the UK and Spain.Gross cash generation as reflected by EBITDA* increased to £205.1m (2004 -£154.2m). The Group funded the purchase of 22,600 new vehicles in the UK and7,700 new vehicles in Fualsa for a total cash outflow of £274.5m. The sale of17,700 UK vehicles and 3,700 Fualsa vehicles generated a cash inflow of £113.1m.The Group paid cash of £15.1m following the exercise of its option to acquire afurther 40% in Fualsa on 3 May 2004. The option over the remaining 20% ofFualsa's equity, whilst exercised, has not yet given rise to a cash outflow.This deferred consideration of a maximum of €14.9m is classified as debt in theGroup's balance sheet but is not expected to be paid until 2006. The acquisitionof Foley Self Drive Limited gave rise to a £4.4m cash outflow.*EBITDA - Earnings before interest, taxation, depreciation and amortisation. Interest Costs Following the consolidation of Fualsa and the subsequent increase in net debt,the Group's net interest costs increased by 38.2% to £21.2m (2004 - £15.4m). Thepercentage increase in interest costs is significantly lower than thecorresponding percentage increase in net debt because the cost of debt in Fualsais based on EURIBOR whereas the UK debt is based on the higher cost LIBOR.Interest cover has decreased to 3.6 times (2004 - 3.9 times) as a result of UKbase rates being higher in the financial year compared to the prior year. Strategy The Group's financing strategy has been approved by the Board. This strategy isto use medium and long-term debt to finance the Group's vehicle fleet and othercapital expenditure. Working capital is funded by internally generated funds andan overdraft facility. The Group's interest rate exposure is managed by a seriesof treasury contracts as described below. Treasury Management Each of the Group's operations is responsible for its own day-to-day cashmanagement. The funding arrangements of the Group with banks are negotiated andmonitored centrally. On 10 January 2005 the Group entered into a series ofunsecured, revolving, bilateral facilities with major UK and European banks toprovide an aggregate Group facility of £565m over one, three and five years.These new facilities have replaced the bank and asset finance facilities thatpreviously existed for the UK. They are also being used to gradually replacedebt facilities in Fualsa within the next two years. All funds generated by theGroup's operations are controlled by a central treasury function. Liquidity The Group's aggregate finance facilities, including existing Fualsa loanfacilities, total £672m compared to net debt of £410.4m. As described above, thecore of these arrangements relate to the £565m unsecured facilities with thefollowing terms: ----------------------------------- | Term | Amount (£m)| | | | | Within one year | 113 | | Within three years | 226 | | Five years | 226 | |---------------------------------| | Total | 565 | -----------------------------------Interest Rate Management The Group has variable rate interest agreements for all of its UK borrowings.Historically, it has sought to manage this risk by having in place a number offinancial instruments covering 30% to 40% of its borrowings at any time. Some ofthe earlier financial instruments are at levels 2% to 4% above prevailing baserates and as a consequence the Group increased this coverage by entering intoadditional interest rate derivatives in May and June 2003. Five-year swaps tocover £45m of debt at an average rate of 3.97% were contracted for as werefive-year interest rate collars covering £55m of debt with a range of 3.15% to5.5%. Since the year end, the Group has entered into a number of Euro swaps,with a minimum term of three years, to cover €150m of debt with an average swaprate of 2.27%. Based on the Group's closing net debt position at 30 April 2005 of £410.4m(represented by Sterling debt of £235.2m and Euro debt of £175.2m), a 1%increase in LIBOR and EURIBOR would generate an additional £4.1m per annum ofinterest costs if financial instruments were not in place. The table belowindicates the additional annual funding costs to the Group at this level of debtfollowing increases in LIBOR and EURIBOR for a range between 1% to 3% afterapplying the benefits of the Group's financial instruments, including those putin place since 30 April 2005: ----------------------------------------------------- | Increase in | Additional interest costs | | interest rate | Sterling debt | Euro debt | Total | |---------------------------------------------------| | 1% | £1.2m | £0.9m | £2.1m | | 2% | £2.1m | £1.6m | £3.7m | | 3% | £2.5m | £2.3m | £4.8m | ----------------------------------------------------- International Financial Reporting Standards Under European Union legislation, all listed companies will be required toreport under International Financial Reporting Standards ("IFRS") for accountingperiods commencing on or after 1 January 2005. The first annual report andaccounts for the Group prepared under IFRS will be for the year ended 30 April2006. At that time comparative information will be restated on the same basis.Interim results for the year to 30 April 2006 will also be prepared on an IFRSbasis. During the last financial year, work has been ongoing with regard to the firsttime adoption of IFRS. The restatement of the opening balance sheet will becompleted in 2005. While the exact financial impact of the changes in Groupaccounting policies as a result of IFRS is still being assessed and has not yetbeen finalised, the following key areas of difference have been identified: •accounting for options and other share-based payments will require a charge against profit on a different basis. •the treatment of goodwill, whereby existing goodwill and goodwill on future acquisitions will no longer be amortised. Future annual impairment reviews of goodwill could result in periodic charges against profit. •recognition of intangibles arising on acquisition and amortisation of these assets. •accounting for derivative financial instruments may cause some volatility of earnings, although the Group's financial instruments are restricted to managing some of the Group's currency and interest rate risks. •the Group will no longer classify the proceeds from vehicle disposals as part of its revenue. •no provision for final dividends payable will be made until approved at a general meeting. Whilst the Group anticipates currently that these will be the major adjustmentswhich arise on transition to IFRS, the Group's convergence project is ongoingand IFRS, along with associated interpretations, continues to be refined anddeveloped. The Group has established a project timetable to ensure therequirements under IFRS will be met and adopted in its interim results for theyear to 30 April 2006. Consolidated Profit and Loss AccountFOR THE YEAR ENDED 30 APRIL 2005 Before goodwill Goodwill Total Total amortisation amortisation 2005 2004 2005 2005 As restated Notes £000 £000 £000 £000Turnover- continuing operations 380,486 - 380,486 355,624- acquisitions 77,781 - 77,781 -- joint venture - - - 23,461 --------- -------- --------- -------- Turnover : Group andshare of joint venture 458,267 - 458,267 379,085Less : share of jointventure's turnover - - - (23,461) --------- -------- --------- -------- Group turnover 1 458,267 - 458,267 355,624 ========= ======== ========= ======== Cost of sales- continuing operations (277,376) - (277,376) (261,255)- acquisitions (56,537) - (56,537) - --------- -------- --------- -------- Total cost of sales (333,913) - (333,913) (261,255) --------- -------- --------- --------Gross profit- continuing operations 103,110 - 103,110 94,369- acquisitions 21,244 - 21,244 - --------- -------- --------- -------- Total gross profit 124,354 - 124,354 94,369 Administrativeexpenses- continuing operations (40,471) - (40,471) (38,693)- acquisitions (7,086) - (7,086) -- goodwill amortisation - (1,116) (1,116) (71) --------- -------- --------- -------- Total administrativeexpenses (47,557) (1,116) (48,673) (38,764) Group operatingprofit --------- -------- --------- --------- continuing operations 62,639 (206) 62,433 55,605- acquisitions 14,158 (910) 13,248 - --------- -------- --------- --------Total operating profit 1 76,797 (1,116) 75,681 55,605 --------- -------- --------- -------- Share of jointventure's operatingprofit - - - 4,578Amortisation ofgoodwill on jointventure investment - - - (236) --------- -------- --------- --------Profit on ordinaryactivities beforeinterestand taxation 76,797 (1,116) 75,681 59,947 Interest payable, net (21,224) - (21,224) (15,355) --------- -------- --------- -------- Profit on ordinaryactivities beforetaxation 55,573 (1,116) 54,457 44,592 --------- -------- Tax on profit onordinary activities (15,963) (13,303) --------- -------- Profit for thefinancial year 38,494 31,289 Dividends (12,837) (11,064) --------- -------- Profit transferred toreserves 25,657 20,225 ========= ======== Earnings per Ordinaryshare - basic 2 59.7p 50.7p Diluted earnings perOrdinary share 2 59.1p 50.6p Dividends per Ordinaryshare 20.0p 17.6p Consolidated Balance Sheet30 APRIL 2005 2005 2004 As restated Notes £000 £000Fixed assetsIntangible assets 14,110 1,981Tangible assetsVehicles for hire 531,843 379,346Other fixed assets 37,947 23,342Investments - - -------- -------- 583,900 404,669 -------- -------- Investment in joint venture -------- --------Share of gross assets - 50,389Share of gross liabilities - (40,215)Goodwill on investment less amortisation - 4,293 -------- -------- - 14,467 -------- -------- Total fixed assets 583,900 419,136 -------- --------Current assetsStocks 18,160 15,285Debtors 92,841 56,382Cash at bank and in hand 41,375 46,160 -------- -------- 152,376 117,827 -------- -------- Creditors: amounts falling due within oneyear 107,284 133,756 -------- -------- Net current assets (liabilities) 45,092 (15,929) -------- -------- Total assets less current liabilities 628,992 403,207Creditors: amounts falling due after morethanone year 403,319 208,079Provisions for liabilities and charges 9,424 6,821 -------- -------- 216,249 188,307 ======== ======== Capital and reservesCalled up share capital 3,709 3,702Share premium account 62,544 61,829Revaluation reserve 1,054 23Merger reserve 4,721 4,721Own shares held 3 (2,471) (1,330)Profit and loss account 146,692 119,362 -------- -------- Shareholders' funds 6 216,249 188,307 ======== ======== Attributable to equity shareholders 215,749 187,807Attributable to non-equity shareholders 500 500 -------- -------- 216,249 188,307 ======== ======== Consolidated Cash Flow StatementFOR THE YEAR ENDED 30 APRIL 2005 2005 2004 As restated Notes £000 £000 Net cash inflow from operatingactivities 5 192,108 157,203 Returns on investments and servicingof finance (20,691) (14,679) Taxation (15,241) (11,279) Capital expenditure and financialinvestmentPurchase of vehicles for hire (274,517) (215,129)Sale of vehicles for hire 113,133 106,771Other items, net (7,254) (4,333) --------- ---------Net cash outflow from capitalexpenditureand financial investment (168,638) (112,691) --------- --------- AcquisitionsAcquisitions of subsidiaryundertakings 4 (19,353) (1,092) Equity dividends paid (11,874) (11,005) --------- ---------Cash (outflow) inflow before use ofliquidresources and financing (43,689) 6,457 Management of liquid resourcesCash placed on deposit (21) (205) FinancingIssue of Ordinary shares (net ofexpenses) 722 16,351Purchase of investments (net)- purchase of own shares 3 (1,141) (1,081)Increase in borrowings 221,166 93,833Capital element of vehicle loans, hirepurchase and finance lease payments (279,243) (263,310)Cash inflow from vehicle loans, hirepurchase and finance lease agreements 93,663 169,577 --------- --------- Net cash inflow from financing 35,167 15,370 --------- --------- (Decrease) increase in cash for theyear (8,543) 21,622 ========= ========= Reconciliation of Net Cash Flow to Movement in Net DebtFOR THE YEAR ENDED 30 APRIL 2005 2005 2004 Notes £000 £000 (Decrease) increase in cash forthe year (8,543) 21,622FinancingIncrease in borrowings (221,166) (93,833)Capital element of vehicle loans,hire purchase and finance leasepayments 279,243 263,310 Cash inflow from vehicle loans,hire purchase and finance leaseagreements (93,663) (169,577)Cash placed on deposit 21 205 ------- -------- Change in net debt resulting fromcash flows (44,108) 21,727 Vehicle loans, hire purchase andfinance lease agreements acquiredwith subsidiary undertakings (66,829) (3,271)Other net debt acquired withsubsidiary undertakings (27,144) -New vehicle loans and hirepurchase agreements (15,083) -Deferred consideration in respectof Fualsa 4 (9,548) -Foreign exchange differences 2,184 96 ------- -------- Movement in net debt for the year (160,528) 18,552 Opening net debt (249,826) (268,378) ------- -------- Closing net debt (410,354) (249,826) ======= ======= Consolidated Statement of Total Recognised Gains and LossesFOR THE YEAR ENDED 30 APRIL 2005 2005 2004 As restated Notes £000 £000 Profit for the financial year 38,494 31,289Revaluation of land and buildings 4 1,031 -Foreign exchange differences 1,482 (290)Share options adjustment underUITF17 (revised) 3 191 141 ------- -------- Total recognised gains and lossesfor the financial year 41,198 31,140 ======= ======== Notes 1. Segmental analysis The Directors consider that the only material class of business isthat of vehicle hire. As such, the only segmental analysis providedis by geographical area. 2005 2004 £000 £000 United Kingdom and Republic of Ireland 385,224 355,624Spain 73,043 - ------- -------- ------- -------- Total turnover 458,267 355,624 ======= ======== United Kingdom and Republic of Ireland 62,165 55,605Spain 13,516 - ------- -------- Total operating profit 75,681 55,605 ======= ======== United Kingdom and Republic of Ireland 44,598 41,536Spain 9,859 3,056 ------- -------- Total profit before taxation 54,457 44,592 ======= ======== United Kingdom and Republic of Ireland 192,373 173,840Spain 23,876 14,467 ------- -------- Total net assets 216,249 188,307 ======= ======== 2. Earnings per Ordinary share The calculation of basic earnings per Ordinary share in respect ofthe year ended 30 April 2005 is based on the profit attributable toequity shareholders of £38,469,000 (2004 - £31,264,000 as restated)and the weighted average of 64,443,741 (2004 - 61,647,279) Ordinaryshares in issue (excluding those shares held by employee trusts inconnection with the Group's various share schemes). Diluted earnings per Ordinary share have been calculated on thebasis of earnings described above and assume that 465,690 shares(2004 - nil), remaining exercisable under the Group's various shareschemes, had been fully exercised at the commencement of therelevant period, such that the weighted average number of shares is65,064,599 (2004 - 61,817,783), including 155,168 shares (2004 -170,504) held by employee trusts in connection with the Group'svarious share schemes. 3. Prior year adjustments Investments in own shares On 1 May 2004, the Group changed its accounting policy in respect ofinvestments in its own shares, in accordance with Urgent Issues TaskForce Abstract 38. A prior year adjustment has been made to reflectthis change in accounting policy. The impact of this change is toreduce both fixed asset investments and shareholders' funds by£1,330,000 at 30 April 2004. The change in accounting policy givesrise to an own shares held reserve. This represents shares held byemployee trusts in order to meet commitments under the Group'svarious share schemes. The impact of the change in accounting policyin the current year is to decrease fixed asset investments by£1,141,000 and to increase the own shares held reserve by the sameamount. Within the consolidated cash flow statement, the change inaccounting policy has caused a reduction in the cash outflow fromcapital expenditure and financial investment and a reduction in thenet cash inflow from financing of the same amount. This amount is£1,081,000 for the year ended 30 April 2004 and £1,141,000 for theyear ended 30 April 2005. There is no impact on the consolidatedprofit and loss account in either year. Shares granted to employees On 1 May 2004, the Group changed its accounting policy in respect ofshares granted to employees, in accordance with Urgent Issues TaskForce Abstract 17 (revised). A prior year adjustment has been madeto reflect this change in accounting policy. The impact of thischange is to increase administrative expenses by £141,000 and reduceprofit after taxation by £141,000 for the year ended 30 April 2004.There is no impact on the profit and loss account reserve as at 30April 2004. Within the consolidated cash flow statement, the changein accounting policy has caused a reduction in Group operatingprofit of £141,000. There is no impact on the net cash inflow fromoperating activities for the year ended 30 April 2004. The impact ofthe change in accounting policy in the current year is to increaseadministrative expenses by £191,000 and decrease profit aftertaxation by £191,000. There is no impact on the profit and lossaccount reserve as at 30 April 2005. Within the consolidated cashflow statement, the Group operating profit is reduced by £191,000.There is no impact on the net cash inflow from operating activitiesfor the year ended 30 April 2005. 4. Acquisitions Furgonetas de Alquiler SA ("Fualsa")On 16 July 2002, the Group acquired a 40% share in Fualsa, a companyregistered in Spain, for a cash consideration of £10,170,000, includinggoodwill of £4,726,000. In the year to 30 April 2004, this investmentwas accounted for as a joint venture. On 3 May 2004, the Group exercised its option to acquire a further 40%of the issued share capital of Fualsa for a consideration of £15,143,000under the share purchase agreement. On the same date, the Group alsoexercised its option to acquire the final 20% of the issued sharecapital of Fualsa. The consideration for this exercise is deferred untilMay 2006 and will be dependent upon the profit after tax of Fualsa forthe calendar years 2004 and 2005. With effect from May 2004, Fualsa hasbeen accounted for as a subsidiary undertaking and in accordance withacquisition accounting principles. £000 Book value 25,433Provisional fair value adjustment 2,578 --------- Fair Value 28,011 --------- Fair value of 60% interest in net assetsacquired 16,807Goodwill 7,395 --------- Acquisition cost (including expenses) 24,202 ========= Fair value of consideration:Cash 15,143Deferred consideration 9,059 --------- 24,202 ========= Cash payment made 15,143Cash equivalents with subsidiary undertakingacquired (90) --------- Cash outflow in year on acquisition of Fualsa 15,053 ========= The total goodwill of £12,121,000, arising on this acquisition,comprises £4,726,000 relating to the initial 40% share and £7,395,000relating to the 60% share of Fualsa. This is being amortised over a 20year period from July 2002. The deferred consideration is includedwithin creditors falling due after more than one year. The fair value adjustment made represents a revaluation of land andbuildings as at 3 May 2004 in line with an open market valuationperformed by professional valuers. The Group revaluation reserve in theconsolidated balance sheet has been credited with 40% of the totalrevaluation, relating to the Group's existing interest in Fualsa priorto 3 May 2004, amounting to £1,031,000. As noted in the reconciliation of net cash flow to movement in net debtthe deferred consideration in respect of Fualsa is shown as £9,548,000.This amount represents the actual amount payable of £10,040,000, whichhas been discounted by the Group's cost of capital, in accordance withFRS7. This has resulted in a charge to the profit and loss account of£489,000 for the year ended 30 April 2005, that has been classified asinterest. Accordingly, an additional amount of £492,000 will be chargedto the profit and loss account on a straight line basis from May 2005until the expected date that the consideration falls due. 4. Acquisitions (continued) Foley Self Drive Limited ("Foley")On 1 August 2004, the Group acquired the entire issued share capital ofFoley for a cash consideration of £3,895,000, including goodwill of£1,557,000. The goodwill on the acquisition of Foley is capitalised andwritten off over a period of five years, being its estimated useful economiclife. The transaction has been accounted for in accordance with acquisitionaccounting principles.
Date   Source Headline
5th Apr 200711:41 amRNSHolding(s) in Company
4th Apr 200712:16 pmRNSTotal Voting Rights
30th Mar 200710:36 amRNSHolding(s) in Company
27th Mar 20074:40 pmRNSHolding(s) in Company
19th Mar 20074:04 pmRNSHolding(s) in Company

Due to London Stock Exchange licensing terms, we stipulate that you must be a private investor. We apologise for the inconvenience.

To access our Live RNS you must confirm you are a private investor by using the button below.

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.