With exposure to the construction sectors in the UK and Spain, van-hire group Northgate (NTG) had a torrid time during the recession. But it shifted back into expansion mode in early 2013, and that's now paying off. If you strip out amortisation and last year's restructuring costs, first-half pre-tax profits surged by almost half to £47.8m year on year.
The UK has been the focus of the group's growth plans, after it identified several gaps in its site coverage. Four sites were added in the first half, with another established in Dartford in November. The 11 sites opened since February last year have now started generating an operating profit, contributing £0.7m in the half, compared with a £1.3m loss in 2013. The group has identified a further 17 locations across the country that would support a site, and hopes to bring its network to a total of 90 locations by the end of 2016.
The Spanish business is also recovering, with an operating margin of 23 per cent during the half - up from 17 per cent last year. As in the UK, that's partly thanks to a lower depreciation charge on the vehicle fleet, which has been justified by better prices achieved on used vehicles after a shake-up of the disposal operation.
Broker Peel Hunt expects adjusted EPS of 40.5p, up from 35.5p in 2013-14.
NORTHGATE (NTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 534p | MARKET VALUE: | £711m | |
| TOUCH: | 533-533.5p | 12-MONTH HIGH: | 619p | LOW: 415p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 304p | NET DEBT: | 98% | |
| Half-year to 31 October | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 289 | 27.4 | 15.7 | 3.20 |
| 2014 | 305 | 46.7 | 27.9 | 4.30 |
| % change | +6 | +70 | +78 | +34 |
Ex-div: 11 Dec Payment: 12 Jan | ||||
