# Redde Northgate deliver record revenue, profits and strong levels of cash generation

- Link: https://www.directorstalkinterviews.com/redde-northgate-deliver-record-revenue-profits-and-strong-levels-of-cash-generation/4121123279
- Published: 2023-07-05T07:16:36+01:00
- Author: Emily Johnson

**Redde Northgate** (LON:REDD), the leading integrated mobility solutions platform
providing services across the vehicle lifecycle, has announced its results for the
full year ended 30 April 2023.

| **Full Year results** | **_Reported_** | **_Underlying^(1)_** | 
| **12 months ended 30 April** | **FY 2023** | **FY 2022** | **_Change_** | **FY 2023** | **FY 2022** | **_Change_** | 
| ** ** | **£m** | **£m** | **_%_** | **£m** | **£m** | **_%_** | 
| Revenue | **1,489.7** | 1,243.6 | 19.8% | **1,336.9** | 1,093.6 | 22.2% | 
| EBIT | **202.0** | 150.8 | 34.0% | **189.2** | 167.9 | 12.7% | 
| Profit before Tax | **178.7** | 132.7 | 34.7% | **165.9** | 151.3 | 9.7% | 
| Earnings per Share | **60.3p** | 41.3p | 46.2% | **55.6p** | 50.8p | 9.5% | 
| _^(1)_ _excludes vehicle sales revenue,_ _exceptional_ _items, amortisation of acquired intangible assets and adjustments to underlying depreciation.  See GAAP reconciliation._ | 
|  |  |  |  |  |  | 
| **Other measures** | **FY 2023** | **FY 2022** | **_Change_** | 
| ** ** | **£m** | **£m** | **£m** | 
| Net debt | **694.4** | 582.5 | 111.9 | 
| Steady state cash generation | **191.5** | 216.4 | (24.9) | 
| Free cash flow | **4.5** | 19.8 | (15.3) | 
| ROCE | **14.1%** | 13.9% | +0.2ppt | 
| Dividend per Share | **24.0p** | 21.0p | 3.0p | 
|    |

> **Martin Ward, CEO of Redde Northgate, commented:**
> “This is an excellent set of results and we are proud of what the Group and all
> our colleagues have achieved this year, delivering record revenue and profits 
> and strong levels of cash generation.  Our integrated mobility platform has helped
> to drive growth and offers significant efficiencies for ourselves and customers.
> Vehicle supply is improving but remains below the high levels of customer demand;
> our financial strength provides an ability to react quickly to supply opportunities
> as they arise.
>  Our acquisitions of two specialist vehicle providers since the start of FY2023
> have taken us into new areas and broadened our UK rental customer base and we 
> continue to review other exciting growth opportunities. The Group fleet is over
> 130,000 vehicles and multi-year insurer contracts are now at full run-rate.  Together
> with our strong pipeline of new business including an additional large leasing
> company multi-service contract due to go live in the autumn, we are confident 
> in continuing to deliver further stakeholder value.”**

**Key financial highlights**

·      Group revenue growth of c.20%; with growth in Redde activity from existing
and new contracts, alongside a managed increase in average hire rates; revenues 
ex-vehicle sales up 22%

·      Reported PBT of £178.7m; benefitted from £46.5m depreciation adjustment, 
offset by NewLaw impairment of £13.5m reflecting strategy prioritisation; no impact
on underlying results or cash

·      Underlying PBT up over 9% to £165.9m due to strong operational performance
and volume growth, partially offset by higher interest costs

·      Steady state cash generation strong at £191.5m; free cashflow reflects investments
in fleet and working capital to support new multi-year contracts, and investment
in Blakedale

·      Healthy balance sheet, over £290m of facility headroom; bank facility extended
out to 2026; 1.5x leverage at midpoint of stated target 1-2x range; FY23: 62% fixed,
including private placement at 1.3%

·      ROCE improved by 0.2ppt to 14.1%; reflecting focus on maintaining strong 
cost control, disposal profits and disciplined capital allocation

·      Shareholder returns: 10.0% increase in final dividend to 16.5p bringing full
year dividend to 24.0p, reflecting Board’s confidence in the outlook; £60m share
buyback completed in December acquiring 7% of ordinary share capital 

**Business highlights**

·      Group fleet up 3% to over 130,000 vehicles, driven by growth in Spain and
replacement vehicles for insurance contracts; LCV scarcity continuing, supporting
residual values

·      Two large insurance contracts went live in H1, high demand for FMG RS repair
solutions and three notable corporate contracts for Spanish repairs

·      Strong pipeline of new business reflecting growing appeal of the platform;
new leasing company multi-service outsourcing contract signed post-year end and 
scheduled go-live in Q2

·      Continued progress in value-added services, now over 10,000 telematics units(
up 10%); cross platform – Northgate UK&I accident management services customer revenues
up 150%

·      Divisional rental margins maintained in line or above mid-term range through
careful pricing actions to manage cost inflation

·      Launch of bundled e-LCV vehicle and charging solutions to help fleet transitions;
Iberdrola partnership for Spanish EV-charging product partnership; development of
UK solar/battery charging products 

·      Acquisitions of Blakedale (July 22) and FridgeXpress (May 23) delivering 
on strategic goals: Blakedale customers up 28% and fleet up over 30% since acquisition

**Outlook**

We continue to enjoy robust demand as we start FY2024 and our recent signing of 
a further multi-service outsourcing contract for Redde reflects our healthy new 
business pipeline. With exciting opportunities across the platform, we expect to
continue to make strategic progress; together with good momentum in the business
we are confident and are well-placed to continue to create long-term value for shareholders.

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