Northgate plc Annual report and accounts 2010 We are the leading light commercial vehicle hire ...

96 Pages·2010·1.38 MB·English

Northgate plc Annual report and accounts 2010
We are the leading light commercial vehicle
hire business in the UK and Spain
Registered offce:
Norfex House, Allington Way, Darlington DL1 4DY
Telephone: [phone] Fax: [phone]
www.northgateplc.com
Northgate plc Annual report and accounts 2010
UK: Vehicle feet
Who we are
2010: 60,900
Northgate plc is the leading light commercial vehicle
2009: 62,900
hire business in both the UK and Spain by feet size
2008: 68,600
and has been operating since 1981. Our core business is the
2007: 65,300
rental of vehicles to other businesses on fexible length
2006: 64,000
agreements, giving customers the fexibility to manage
their vehicle feet without a long-term commitment.
Spain: Vehicle feet
What we do
2010: 48,900
2009: 60,400
2008: 62,750 The business in the UK and Ireland operates from
2007: 55,000 65 sites with a feet of 60,900 vehicles. In addition, we
sell former rental vehicles to both retail and trade
2006: 47,000
customers. We also offer an increasing range of services
and products to help customers manage their feets
Underlying group proft
2 effectively, such as vehicle monitoring and parts
before tax £m
procurement. Our Fleet Technique business offers the
2010: 36.5 opportunity for customers to outsource feet management
whilst retaining ownership.
2009: 27.5
2008: 83.1 In Spain, we operate through two separate brands,
2007: 79.3 Fualsa and Record. With 32 branches and a combined
2006: 61.3 feet of 48,900 vehicles we are the market leaders in
light commercial vehicle hire in Spain.
1
Group operating proft £m Our customers operate in a wide range of industries, of
which construction and support services are the two
2010: 82.8
largest. Other major sectors include local authorities,
2009: 71.8 public utilities and retailers.
2008: 121.8
2007: 111.0
Our vision
2006: 73.8
We always put our customers frst, providing tailored
vehicle solutions which match the needs of each individual
Contents
business and offer only the leading manufacturers’
products in each weight category – from a single van to a
Review
feet of thousands. We offer access to a vehicle feet
01 Highlights of the year
02 Chairman’s statement of more than 100,000 vehicles. These principles ensure that
04 Group at a glance
all of our customers beneft from a friendly, focused and
05 Key performance indicators
personal service.
06 Operational review
12 Financial review
16 Principal risks and uncertainties
18 Board of directors Our strategy
20 Report of the Directors
Corporate governance
Going forward our strategy is to concentrate on increasing
23 Remuneration report
29 Audit committee report the proftability and operational effciency of the Group
30 Corporate governance
without compromising on the quality of service and
32 Health & safety and environmental
fexibility offered to our customers. We will achieve this by
33 Directors’ responsibilities
managing the feet effciently and concentrating on doing
Auditors‘ Report
the simple things very well.
34 Independent Auditors’ Report to the Members of
Northgate plc
Primary Statements
35 Consolidated income statement
36 Statements of comprehensive income
37 Balance sheets
38 Cash fow statements
39 Notes to the cash fow statements
40 Statements of changes in equity
Notes to the accounts
41 Notes to the accounts
84 Five year fnancial summary
85 Notice of annual general meeting
88 Appendix of notice of AGM
90 Shareholder Information
Operational highlights
Highlights of the year
Average utilisation in the year of 91% in the UK
(2009 – 88%) and 88% in Spain (2009 – 83%)
Pricing improvement of 3% in the UK since April 2009
Benefted from strong used vehicle markets in both
the UK and Spain
Closing feet of 60,900 in the UK (2009 – 62,900) and
48,900 in Spain (2009 – 60,400)
Reorganisation of the UK business underway
Underlying fnancial highlights
2010 2009
Group operating proft1 £82.8m £71.8m
Underlying proft before tax2 £36.5m £27.5m
Basic earnings per share3 26.8p 59.2p4
Earnings3 £28.2m £19.2m
Net debt5 £598m £886m
Return on capital employed1 8.4% 5.8%
Successful completion of debt refnancing and equity
Group operating proft1 fundraising during the year.

Statutory fnancial highlights
+15.4%
2010 £82.8m Proft from operations increased to £71.1m
(2009 – loss of £117.5m)
2009 £71.8m
Proft before taxation of £9.6m after exceptional items
of £21.9m (2009 – loss of £195.6m after exceptional items
Underlying proft before tax2 of £217.9m)
Basic earnings per share increased to 23.1p
(2009 – loss per share of 572.6p4)

+ 32.8% Proft for the year increased to £24.4m
(2009 – loss of £185.7m)
2010 £36.5m

2009 £27.5m 1 Stated before intangible amortisation of £5.0m (2009 – £5.3m), exceptional items
of £6.7m (2009 – £3.1m) and impairment of £Nil (2009 – £180.9m).
2 Stated before intangible amortisation of £5.0m (2009 – £5.3m), exceptional items
of £6.7m (2009 – £3.1m), impairment of £Nil (2009 – £180.9m) and exceptional
Net Debt5 fnance costs of £15.2m (2009 – £33.8m).
3 oStfa £te6d.7 bme f(o2r0e0 i9n t–a n£g3i.b1lme a),m imorptaisiarmtioen to of f£ £5N.0ilm (2 (020090 9– –£ 1£850.3.9mm),) ,e exxcceepptitoionnaal li tfenmasn ce
costs of £15.2m (2009 – £33.8m) and tax credit of £23.0m (2009 – £18.2m).
4 As restated for the bonus element of the ten for one rights issue at seven pence per
-£288m Oefrfdeicntaivrey 2sh3a Sre petfefemcbtievre 21020 A9.u gust 2009 and the one for ten consolidation
2010 £598m 5 Net debt taking into account the fxed swapped exchange rates for US loan notes.
2009 £886m

Northgate plc Annual report and accounts 2010 Review 1
I am pleased to present my frst report outright purchase or do not wish to
Chairman’s statement
since joining the Group in February. Let commit to long-term lease or contract
me start with an historical perspective. hire. As we focus our efforts on SME
customers we will carefully monitor
By the end of the 2008 fnancial year the
debtor age profles. We will continue
Group had aggressively expanded its feet
to concentrate on conserving cash and
to a level of 68,600 vehicles in the UK and
paying down debt.
62,750 in Spain, but some of this growth
had been at the expense of margins.
When the recession hit, utilisation levels UK
fell in 2009 to 88% in the UK and
83% in Spain, compared to historic rates
5
Our underlying UK rental margin
of over 90% and the problem was
increased to 18.5%, compared to 12.8%
exacerbated by a dramatic fall in vehicle
in 2009 and utilisation rates in the UK
residual values in both the UK and Spain.
averaged 91% (2009 – 88%). This was
This put inordinate strain on the balance achieved by continuing the actions taken
sheet and, at the beginning of the in 2009 to improve feet management
fnancial year, the Group raised £108m and to focus on hire rate improvement.
(£77m net of equity and debt This was alongside improved market
arrangement fees) from a rights issue, conditions, particularly in the used vehicle
thus refnancing its debt and securing the market, where much improved residual
capital structure up until September 2012. prices for second-hand vehicles
contributed £6.5m towards operating
By the end of 2009 the UK feet numbers
proft (2009 – £14.4m reduction in
had fallen to 62,900 vehicles and in
operating proft).
Spain to 60,400. This process continued
in 2010 with the UK feet falling by 3% Historically, the Group had operated
to 60,900 vehicles and in Spain falling through 20 hire companies across the
by 19% to 48,900. UK, each with its own local brand and
management. There was a great degree
“Since the refnancing last year, we Going forward, the focus of the Group
of rivalry between these businesses
have met substantially all of our will be to maintain utilisation in excess
which did not always operate in the
targets. Going forward, we will of 90%, improve operating effciency
best interests of either the Group or the
concentrate on doing simple things to reduce costs and to concentrate on
customer. By the end of August 2010,
very well. We will complete the UK increasing the return on capital employed
the 20 companies will become
restructuring. We will develop (ROCE), the key performance measure for
12 business areas operating under the
further plans for Spain, which is the Group, above levels previously
Northgate Vehicle Hire brand.
already signifcantly more achieved.
operationally effcient than the UK, A decision was taken in April to
The combination of the rights issue,
and will continue to focus on margin. commence a restructuring of the UK
strong cash generation and improved
business to signifcantly improve our
Our aim is 90% utilisation and if we proftability has produced the following
effciency and establish a solid base for
need to further reduce the feet so results for the year ended 30 April 2010:
growing the business and improving
be it. Maximising returns and
1
• Underlying proft before tax customer service whilst also increasing the
charging fully for ancillary services
increased by 32.8% to £36.5m operating margin. Along with this radical
will be our prime targets.
(2009 – £27.5m); overhaul of the UK operating structure,
The Group has begun the new we see the opportunity for signifcant cost
2
• Net debt reduced by £288m to £598m
fnancial year in line with savings, for example in maintenance,
(2009 – £886m);
expectations”. repair and overheads.
3
• ROCE 8.4% (2009 – 5.8%);
An inordinate amount of time had been
• Basic earnings per share increased dedicated in trying to develop an IT system
to 23.1p (2009 – loss per share of to meet the requirements of all the
4
572.6p ). separate companies within the Group.
This could not be achieved. We are now
The Board has debated the dividend issue
adopting standardised operating
long and hard and, on balance, has
procedures for all of our units and have
decided that it is not yet prudent to pay a
chosen a proprietary IT solution to meet
dividend. The Company is facing diffcult
our needs. The implementation of this
economic conditions in both the UK and
Group wide IT system should be complete
Spain. There will be major government
by April 2011. This will reduce our costs
cutbacks which will reduce demand for
and give us much better information
some vehicle units, but our fexible model
about the proftability of our activities,
may well prove attractive to customers
processes and services. Taken together
who struggle to raise the capital for
Northgate plc Annual report and accounts 2010 Review 2
with the consolidation of operating units Balance sheet As part of the review, Phil Moorhouse,
and the Board changes set out below, this UK Managing Director, agreed to bring
should result in annualised cost savings forward his retirement from 31 December
During the year net debt has reduced by
of over £10m from April 2011. 2010 to 31 March 2010. I would like to
£288m to £598m. This was primarily as a
personally thank Phil for the objective
We are also establishing a national result of the rights issue proceeds of £77m
insights into the UK business which he
sales team to concentrate on our core (net of equity and debt arrangement fees),
has given me.
SME customers. continued strong EBITDA (earnings before
interest, taxation, depreciation and Bob Contreras, our Group Finance Director
amortisation) of £306m and working since June 2008, was appointed Chief
Spain
capital of £39m, with net interest Executive on 7 June 2010. I am confdent
payments of £48m and net capital that he will drive the business forward,
Our Spanish business operates in an expenditure on vehicles of £110m being implement the necessary changes agreed
extremely diffcult environment, £61m lower than in the previous year. by the Board and focus on maximising
particularly in the construction and related returns over the coming years. We are
It is important that the Group has secure
sectors. Despite approximately 60% of currently conducting a thorough search
fnancing to support the business across
our business coming from these sectors, for a Finance Director and will make an
the economic cycle. At 30 April 2010 we
we have made progress in a number of announcement in due course.
6
had net debt of £598m, which gave us
operational areas. Improved feet
headroom of £240m on our committed Paul Tallentire, the Deputy Chief Executive,
management has, in turn, improved
debt facilities of £865m. Net debt to decided that his future lay outside
average utilisation. Indeed, utilisation in
EBITDA was 2.0 (2009 – 2.5) and the Group and we thank him for his
the last two months of the year averaged
headroom on all covenants improved contribution and wish him well for
90%. A major contributory factor has
since the date of refnancing. the future.
been the successful introduction of a
used vehicle disposal capability based Our committed facilities mature in
on our UK experience. We introduced September 2012 and we will assess the Current trading and future outlook
a retail website and further developed appropriate timing of refnancing well
our wholesale disposal channel. As a ahead of its maturity.
Since the refnancing last year, we have
direct consequence we were able to
met substantially all of our targets. Going
dispose of 19,800 vehicles (an increase
Board changes forward, we will concentrate on doing
of 50% on the previous year) at higher
simple things very well. We will complete
residual values.
the UK restructuring. We will develop
On becoming Chairman one of my frst
In Spring 2009, the Record head offce further plans for Spain, which is already
tasks, with the assistance of the
in Castellón was closed and its operations signifcantly more operationally effcient
Nominations Committee, has been to
were integrated into the Fualsa head than the UK, and will continue to focus
decide on the future management
offce in Madrid. I have to report that on margin.
structure of the Group.
this resulted in considerable operating
Our aim is 90% utilisation and if we need
problems. This compounded the bad The Chief Executive, Steve Smith,
to further reduce the feet so be it.
debt situation which was already under originally intended to retire on 31 July
Maximising returns and charging fully for
pressure from high levels of bankruptcy 2009 but had agreed to stay on to guide
ancillary services will be our prime targets.
within the local economy. The bad debt the Group through its refnancing, placing
charge for the year increased to €10.3m and rights issue during very diffcult The Group has begun the new fnancial
(2009 – €3.7m). Both the CEO and CFO trading conditions. Having successfully year in line with expectations.
in Spain have been replaced and our new completed the task, Steve stood down on
team in Spain has made an excellent start 31 March 2010. I would like to thank him
and is concentrating on resolving the not only for his efforts in the last 12 Bob Mackenzie
inherited administration problems. The months but also for more than 20 years Chairman
bad debt charge in the second half of the of dedicated service. He was very helpful in
year was reduced by €1.3m compared to introducing me to the Group when I
1 S tated before intangible amortisation of £5.0m (2009
the frst half of the year and there was a became Chairman.
– £5.3m), exceptional items of £6.7m (2009 – £3.1m),
signifcant improvement in debt collection impairment of £Nil (2009 – £180.9m) and exceptional
Alan Noble founded the business in
fnance costs of £15.2m (2009 – £33.8m).
resulting in a €50.6m (35.2%) reduction
February 1981 and was the driving force 2 N et debt taking into account the fxed swapped
in Spanish debtors compared with
exchange rates for US loan notes.
behind its early growth. Regrettably due
31 October 2009. 3 S tated before intangible amortisation of £5.0m (2009
to ill health, he retired from the business
– £5.3m), exceptional items of £6.7m (2009 – £3.1m)
on 31 March 2010. I would like to thank and impairment of £Nil (2009 – £180.9m).
4 A s restated for the bonus element of the ten for one
him for his many years of dedicated
Rights Issue at seven pence per Ordinary share
service to the Group.
effective 12 August 2009 and the one for ten
consolidation effective 23 September 2009.
5 Calculated as operating proft before intangible
amortisation of £2.3m (2009 – £2.6m), exceptional
items of £5.8m (2009 – £0.8m) and impairment of
£Nil (2009 – £61.5m), divided by revenue of
£312.0m (2009 – £334.7m), excluding vehicle sales.
6 Net of £27m of unamortised arrangement fees.
Northgate plc Annual report and accounts 2010 Review 3
Group at a glance
UK Hire and Fleet Technique Spain Hire

Revenue 2010 £328.2m £235.5m
(excluding vehicle sales) 2009 £352.7m £257.0m
1
Operating proft 2010 £58.9m £30.0m
2009 £43.8m £32.6m
2
Operating margin 2010 18.0% 12.7%
2009 12.4% 12.7%
Number of employees 2010 2,122 974
2009 2,253 956
Closing feet 2010 60,900 48,900
2009 62,900 60,400
Vehicle sales 2010 £114m 22,700 vehicles £72m 19,800 vehicles
2009 £116m 23,400 vehicles £45m 13,200 vehicles
Vehicle purchases 2010 £211m 18,800 vehicles £99m 9,100 vehicles
2009 £198m 16,900 vehicles £96m 8,800 vehicles
Average utilisation 2010 91% 88%
2009 88% 83%
Locations 65 32
Vehicle types Car Car
Car derived van Car derived van
Large van Large van
Medium van Medium van
Minibus Minibus
Short wheel base van Short wheel base van
4x4 4x4
Customers by sector Construction & civil Engineering 30% Construction 57%
Support services 16% Support services 17%
Logistics 14% Manufacturing 8%
Hire of plant and vehicles 8% Retail 4%
Government bodies 7% Engineering 3%
Business supplies & services 6% Logistics 3%
Others (less than 5%) 19% Others (less than 3%) 8%
Customers by feet size Corporate feets (>100) 39% Corporate feets (>100) 32%
Small and medium feets (5–100) 49% Small and medium feets (5–100) 53%
Micro-feets (< 5) 12% Micro-feets (< 5) 15%
Main trading subsidiaries Northgate Vehicle Hire Limited Furgonetas de Alquiler S.A
Northgate Vehicle Hire (Ireland) Ltd Record Rent a Car S.A
Fleet Technique Limited
1 Before intangible asset amortisation and exceptional items. Excludes corporate costs.
2 Operating proft as per (1) and excluding vehicle sales revenue. .

Northgate plc Annual report and accounts 2010 Review 4
Key performance Going forward, the focus of the Group will be to maintain
utilisation in excess of 90%, improve operating effciency
indicators to reduce costs and to concentrate on increasing the
return on capital employed (ROCE), the key performance
measure for the Group, above levels previously achieved.
Performance Target Key performance indicators
Utilisation Utilisations have improved in both The target for both segments is to Utilisation improvement
Utilisation needs to be hire segments as a result of effcient maintain average utilisation above
maintained at a high level in management of a lower feet. 9in0 t%he. TUhKis w isi tchu trhren trlye nbde ing S apcahinie ved UK +3%
order to maximise return UK Average utilisation has improved leading towards this being achieved
on capital employed whilst to 91% (209 – 8%). in the next fnancial year. Spain +5%
mhoeledtin tgh ee nfoeuxigbhle v deehmiclaensd tso Scopmaipna rAevde rtaog 8e3 u%til isna tihoen porfi o8r8 y%ea r, 2010 2009
of our customers. with utilisation in the last two UK 91% 88%
months of the year averaging 90%. Spain 88% 83%
Hire rate UK Increase in average hire revenue Minimum hire rate thresholds have Hire rate improvement
The hire rate achieved is a per vehicle of 0.6% (although >3% been set for new vehicles. Further
key contributor to return on since fnal quarter of prior year) rate increases are targeted in the UK UK +0.6%
capital employed. Hire rates achieved through a combination and Spain through improved sales
of rate increases, increased pricing analysis to eliminate low margin
need to refect for new vehicles and improvements customers, and improved recovery Spain-2.4%
the level of fexibility and in recharging of other costs. on recharging of costs such as
service offered to our colection, delivery and damage
c

ustomers. rS2iucptnehoa.npcd4emruarut %elt ipaconialta isf spit nAoeetrsinhvrdiem e ea psivrn naaayea rdreghtfitl ae yielmcor e.larfwe itan Rs stt esiah remitretzeos eseru asury,hme etlitotedna lstuocrirh d grcfifnera eoeha ydtltsil serhoh reibdenewodyn glr e idtain na tglr e l ya r
ecovery.
rates for new customers.
Fleet management The level of vehicle purchases and The overall feet size in the UK and Closing feet
The size and age of the feet sales is controlled in order to manage Spain is expected to remain relatively
needs to be managed in order feet size and ageing. Overal holding stable in the short term with focus UK 60,900
to maximise utilisations and costs are minimised through remaining on maximising utilisations
minimise the overal holding managing the mix and volume of and hire rates. Further holding cost Spain 48,900
cost of vehicles. p
anudrc hbay siems pfrovmin ega tchhe m efafneuctfiavcetnueressr smaavinnaggsi nagre t htaer gmeitxe do ft hverohuicgleh
of vehicle sales channels. purchased through each
manufacturer and maximising
disposals through higher margin
retail and semi-retail channels.
Return on capital employed ROCE is maximised through a Each KPI above has been targeted ROCE Group
In a capital intensive business, combination of managing utilisation, for improvement to contribute to
return on capital employed is hire rates, vehicle holding and an overal increase in ROCE of the +2.6%
a more important measure of other costs. Group. Overall ROCE for the Group
p
a
r
teoleot rusnfhroenar,ms rae lshao nowlocld weve a trmhlsu.aenr g pinro bfutasibnielistys G
( 2r0o0u9p –R O5.C8E%1 )f. or the year was 8.4% isn teaxrcgestse do ft o1 0re%co. ver to a level 200190 85.84%
Earnings per share (EPS) Earnings3
Basic EPS is considered to be Basic EPS2 of 26.8p compared to
The target is to maximise shareholder
a key short term measure of 59.2p in the prior year but with value by increasing EPS in the short +47.2%
performance used by earnings increasing by 47.2% to term alongside longer term return
shareholders. £28.2m (2009 – £19.2m). on equity. Basic EPS
2010 26.8p

2009 59.2p
1 Before intangible amortisation, exceptionals items and impairment.
2 Stated before intangible amortisation, exceptional items, impairment and the tax effect thereon. Shares as restated for the bonus element of the ten for one rights issue
at seven pence per Ordinary share effective 12 August 2009 and the one for ten consolidation effective 23 September 2009.
3 E arnings as adjusted for items stated in (2) have increased year on year, whilst basic EPS have decreased due to the increased number of shares in issue following the rights issue in
September 2009.
Northgate plc Annual report and accounts 2010 Review 5
all stages of the economic cycle, and
Operational and fnancial Operational Review
therefore we aim to maintain an average
reviews rate of at least 91% going forward.
Group
As part of the process to increase
utilisation we purchased 18,800 vehicles
After the severe economic downturn in
in the year (2009 – 16,900) but increased
the latter part of 2008, the Group
the average age of the feet from
began the implementation of several
19.4 months to 20.8 months. Whilst this
operational measures in order to improve
does not represent a signifcant ageing
performance. In particular, in February
of the feet, it has made a contribution
2009, the Board approved a three-year
to the substantial level of operating cash
strategic plan, which was effective from
generation of the Group in the year, as
May 2009. That plan focused on the
referred to in the Financial Review.
following key performance improvements
in both the UK and Spain: Hire rates
• Improved feet management; Average hire revenue per vehicle in the
year was 0.6% higher than in the previous
• Pricing increases;
year. However, since increased hire rates
• Cost reduction; and were specifcally targeted in the fnal
quarter of the previous fnancial year, the
• Improvement in vehicle disposal
increase in revenue has been in excess of
capabilities.
3%. This is a combination of increased
We are pleased that we have been able to headline hire rates with both new and
meet substantially all of our targets for the existing customers, as well as initiatives
year ended 30 April 2010, as explained to improve the levels of recharges in areas
in more detail below, despite a backdrop such as collection and delivery and
of continuing economic uncertainty, and damage recovery.
generate a much improved return on
Depot network
1
capital employed of 8.4% (2009 – 5.8%).
As part of the ongoing rationalisation of
The Group also successfully refnanced its
operating costs and increased effciency,
debt and completed a placing and rights
we reduced the network of hire locations
issue in the year. The fnancial stability that
by 15 from 80 to 65 during the year. This
“We are pleased that we have been these measures produced will allow the
is part of the continuing move towards
able to meet substantially all of our Group to focus on the implementation of
a structure of larger hubs with a smaller
targets for the year ended 30 April longer-term operational improvements.
number of satellite locations. Customer
2010, despite a backdrop of continuing
accounts managed by those closed
economic uncertainty, and generate a
United Kingdom hire of vehicles branches have been transferred elsewhere
much improved return on capital
within the network.
employed of 8.4% (2009 – 5.8%).”
The successful management of feet As part of the ongoing focus on effciency,
utilisation, from an average of 88% in headcount has reduced by 131 (6%) since
the previous fnancial year to 91% in the the start of the fnancial year. The full year
current fnancial year, combined with saving in payroll costs in relation to these
improvements achieved in pricing, individuals is approximately £2.6m.
operational effciencies and increases in
We have also driven additional effciencies
used vehicle residual values have led to
in our vehicle repair workshops, with a
2
an increase in operating margin from
1% reduction in the net maintenance
12.8% to 18.5%.
cost of each of our vehicles in the year,
Vehicle feet and utilisation compared to 2009; this is despite the
slight increase in the ageing of the feet
We managed the UK feet size down by
during the year noted above.
3% to 60,900 vehicles at 30 April 2010
(2009 – 62,900). However, the closing
number of vehicles on hire fell by only
600 compared to 30 April 2009 and
utilisation for the year averaged 91%
(2009 – 88%), better than anticipated in
our three-year plan. As part of our goal
to increase return on capital employed,
utilisation remains a key area of focus, at
Northgate plc Annual report and accounts 2010 Review 6
One Northgate
During the 2011 fnancial year we will conduct
a fundamental reorganisation of the UK
business. We will create ‘One Northgate’
– what does this mean?
A best in class support services company under one brand
and one set of operating procedures, maximising operating
effciencies and eliminating duplication.
Our employees will receive improved training allowing them to
provide the customer with a consistent service throughout our
network.
One Northgate will initially involve:
• Consolidating 20 hire companies down to 12 business areas
rebranded as Northgate Vehicle Hire
• A new IT system and roll-out of a business blueprint which will
allow us to operate as one business
• The same consistent service throughout our network
• Centralisation of certain administrative functions
• Annualised savings of over £10m by April 2011 with other
areas being identifed for review
c. £10m
Annualised costs savings to be implemented by April 2011
Substantiation
picture of printed material/
advert with new branding
applied.
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repuda doluptiundae.
Northgate plc Annual report and accounts 2010 Review 7
Restructuring Fleet Technique
The latter part of the fnancial year
has seen the commencement of a Fleet Technique, which manages feet on
restructuring of the UK business. A key behalf of those of our customers that own
part of this restructuring is the reduction their own vehicles, increased its level of
in the number of hire companies from operating proft to £1.3m (2009 – £0.9m),
20 to 12, as well as the movement to a despite the number of jobs managed
single common brand. Northgate Vehicle slightly falling by 1.9% to 86,500
Hire will replace the existing local brands (2009 – 88,200). The Fleet Technique
of each of the hire companies. It is business continues to add value to the
expected that this restructuring will be Group as a whole as we leverage its
completed during the frst half of the systems capability to coordinate external
fnancial year ending 30 April 2011. repairs for the vehicle rental business.
Once the overall rationalisation of the
business is complete, it is anticipated Spain hire of vehicles
that the ongoing cost savings will be
approximately £10m per annum from
Improved feet management together with
April 2011 with total implementation
signifcant improvements in our used
costs by that date of a similar amount,
vehicle disposal capability, despite
the majority of which has been incurred
challenging economic conditions, has led
in the year ended 30 April 2010.
to current feet utilisation in excess of
Used vehicle sales 90% and better residual values achieved
for used vehicles when sold. Alongside
There has been a signifcant improvement
this, ongoing operational effciency
in the resale values achieved for used
improvements have offset reductions in
vehicles during the fnancial year, mainly
vehicles on hire and hire rates charged
due to the recovery in market prices.
per vehicle, as well as a higher incidence
During the year, a total of 22,700 vehicles of bad debts to maintain the operating
10
(2009 – 23,400) were sold with the retail margin at 12.7% (2009 – 12.7%).
and semi-retail channels accounting for
Vehicle feet and utilisation
19% (2009 – 18%) of those disposals.
As anticipated in the three-year plan,
The improvement in the values achieved
the total feet fell from 60,400 vehicles
for the vehicles disposed, above our
at 30 April 2009 to 48,900 vehicles at
expectations, has been refected in
30 April 2010. Of this fall, vehicles on
a decrease of £6.5m (2009 – £14.4m
hire fell by 6,400 and we reduced the
increase, as restated) in the
feet by a further 5,100 vehicle to increase
depreciation charge.
utilisation. The average utilisation rate
IT for the fnancial year was 88%
(2009 – 83%) and utilisation at the year
The UK will complete the roll-out of the
end exceeded 90%.
Group-wide Enterprise Resource Planning
(ERP) system by April 2011 as part of One of the reasons for the achievement of
the restructuring of that business. This will 90% utilisation in the last quarter of the
cover operations, asset management and year was the focus on a reduction in the
fnance and will be used as a basis to number of vehicles under repair, from 9%
improve customer service and reduce costs at December 2009 to 4% at April 2010.
through further operational effciencies.
Another factor in achieving this increased
utilisation level was the continued low
level of vehicle purchases, with only
9,100 vehicles purchased in the year
(2009 – 8,800). This, in conjunction with
the level of vehicle disposals explained
below, resulted in an increase in the
average age of the feet from 25.5 to
27.2 months.
Northgate plc Annual report and accounts 2010 Review 8