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12 May 2021
This announcement contains price sensitive information
REDDE NORTHGATE PLC
(“Redde Northgate” or the “Group” or the “Company”)
Pre-close Trading Update
Stronger than expected performance with PBT ahead of consensus; entering new financial year in a position of strength
Redde Northgate plc (LSE:REDD), the leading integrated mobility solutions platform providing services across the vehicle lifecycle, today announces a pre-close trading update for the year ended 30 April 2021, ahead of its results for the year scheduled for 7 July 2021.
Further to the interim results announcement on 8 December 2020, momentum has continued to build across the Group in the second half of FY2021. Against the backdrop of COVID-19, including the most recent lockdowns in the UK, total closing VOH has grown 2% across the Group in the second half, comprising 4% growth in UK&I, with Spain broadly flat. Closing VOH is now higher than prior year by 13% in UK&I, 9% in Spain and 11% in the combined Group. The used vehicle market has remained strong in LCVs (particularly in the UK) delivering higher disposal profits than expected. Redde continued to be impacted by reduced volumes through the period, but post the easing of lockdown restrictions in early April, volume indicators are now showing a significant pick up.
Based on unaudited results, underlying revenues (excluding vehicle sales) were approximately 51% higher than the prior year, and total Group revenues (including vehicle sales) were approximately 43% higher than the prior year. The increase in revenues year on year is primarily attributable to the inclusion of Redde since the Merger on 21 February 2020, as well as LCV rental and sales growth.
As a consequence of the stronger than expected performance in H2, the Board now expects underlying PBT for FY2021 to be moderately above the top end of the current range of analyst estimates and not less than £92m.
Focus, Drive and Broaden
The Group continues to make excellent progress on delivering its strategic initiatives through the Focus, Drive and Broaden framework. To date, it has achieved Merger integration savings of £14.6m against the FY2022 target of £15m. Together with additional permanent cost savings achieved of £4.2m, the total annualised run rate is £18.8m, and is expected to be delivered at a one-off cash cost of £2.5m against an original estimate of £10m.
Cash flow and financing
The Group's financial position remains strong, with continuing good cash flow generation in the period, closing the year with substantial headroom under its debt facilities. From this position of strength we have taken the opportunity post year-end to acquire c2,000 vehicles from a Scottish vehicle rental business for approximately £25m, bringing significant benefits from ongoing customer relationships, which we would look to further strengthen through our expanded Group offerings.
With rental revenue and used LCV values supporting a strong closing position to the financial year and Redde volumes showing a strong rebound post lockdown restrictions easing in early April, the Board is confident that the strategy it set out at the time of the Merger will deliver the value it envisaged.
Commenting on the trading update, Martin Ward, CEO Redde Northgate said:
“The second half of the year has delivered a strong set of results. The demand for LCV rental and used LCV sales has seen an uplift in H2 and sets the business up well going into our new financial year. Traffic volumes and resultant mobility and repair incidents continued to be suppressed throughout H2 but early indications, post lockdown restrictions easing in early April, have shown a strong bounce back as daily routines in mobility resume.
“Our integration plans have almost delivered the revised targets we set out on cost savings, well ahead of time, and well below the one-time cash costs to implement. This has placed the business in a strong position as we face into a number of opportunities to deliver our unique integrated mobility platform proposition. However, I recognise there is still much more to do to deliver the full benefits of our strategy, and we remain focussed on our strategic initiatives.
“I am particularly thankful to our people who have worked tirelessly throughout the year to deliver exceptional service to our customers. Many of our colleagues have taken up the SAYE share scheme, launched this year, and it’s good to see they have the opportunity to share in the future success of the business. Our entry into the FTSE250 index in April was a milestone we are all proud to have achieved.
“We enter FY2022 from a position of strength, and we look forward to updating on progress as we continue to execute on our strategy. ”
Notice of Results
The Group is planning to announce its preliminary results on 7 July 2021 and publish its Annual Financial Report shortly thereafter.
For further information contact:
David Rydell/Jamie Hooper/Tilly Abraham +44 (0) 207 466 5000
Notes to Editors:
Redde Northgate is the leading integrated mobility solutions platform providing services across the vehicle lifecycle. The Company offers integrated mobility solutions to businesses, fleet operators, insurers, OEMs and other customers across six key areas: vehicle rental, vehicle disposal, vehicle ancillary services, repairs, accident management and vehicle data.
The Company’s core purpose is to keep its customers mobile, whether through meeting their regular mobility needs or by servicing and supporting them when unforeseen events occur. With its considerable scale and reach, Redde Northgate’s mission is to offer a market-leading customer proposition and drive enhanced returns for shareholders by creating value through sustainable compounding growth. The Group aims to achieve this through the delivery of its strategic framework of Focus, Drive and Broaden.
Redde Northgate services its customers through a network and diversified fleet of over 110,000 owned and leased vehicles, supporting over 500,000 managed vehicles, with more than 170 workshop, body shop and rental locations across the UK, Ireland and Spain and a specialist team of over 6,000 automotive services professionals.
Further information please visit the Company's website:
 Current range of analyst estimates for FY2021 underlying PBT £83.3m to £88.0m