Van-hire company Northgate continued to restructure its balance sheet in the first half, incurring £12.5m-worth of exceptional financing fees in the process, in addition to £1.1m of other one-off costs.
But the result of all this expense is that Northgate finally looks to be on a firmer financial footing. It generated £108m from its July fund-raising and substantially depleted its fleet of vans to bring net debt down by 20 per cent to £706m. This means gross debt of £737m is comfortably below the £891m borrowing facilities the group agreed in September.
What's more, trading in Northgate's rental businesses in the UK and Spain is steadier. In the UK, fleet utilisation was over 91 per cent and rental rates actually picked up by 2.3 per cent during the half after a painful slide. Meanwhile in Spain, utilisation rose for the third consecutive six-month period to 88 per cent and underlying hire rates remained stable. A pick up in second-hand van prices also helped profits following previous heavy write-downs to the value of the group's fleet last year, which could prove significant given Northgate that still owns 116,000 vans.
Broker Panmure Gordon expects full-year pre-tax profit of £31m and EPS of 16.4p (from 28.7p in 2009).
| NORTHGATE (NTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 238p | MARKET VALUE: | £394m | |
| TOUCH: | 237-238p | 12-MONTH HIGH: | 405p | LOW: 78p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 218p | NET DEBT: | 248% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008* | 309.6 | 23.92 | 56.8 | 10.5 |
| 2009 | 290.2 | 5.70 | 5.1 | nil |
| % change | -6 | -76 | -91 | |
*Adjusted for rights issue and share consolidation | ||||
