Redde Northgate trading ahead of expectations

Redde Northgate

Redde Northgate plc (LON:REDD), the leading integrated mobility solutions platform providing services across the vehicle lifecycle, has announced a trading update for the year ended 30 April 2022, ahead of its results for the year scheduled for July 2022.

Group trading

The Group continues to perform well and is trading ahead of expectations, driven by a strong performance across the business. Rental margin to the end of February was 15.8% in UK&I and 17.5% in Spain.

Further to the interim results announcement on 1 December 2021, the Group has continued to de-fleet a lower number of vehicles due to rental demand and new vehicle supply constraints with used vehicle market values staying strong.  Vehicle supply constraints are expected to continue through FY 2023.

Redde volume recovery was hindered in December and January by the Omicron and work-from-home restrictions. The Group has seen good improvement since the beginning of February and volumes are now running at circa 90% of pre-Covid levels.

Based on the current trends the Board now expects full year underlying profit before tax for the year ended 30 April 2022 to be in the region of £150m, comfortably ahead of consensus[1] of £133.9m. The Board expects disposal profits to account for c.33% of the full year underlying profit before tax compared to c.43% in the prior year.

Share buyback programme

The Group’s objective is to employ a disciplined approach to investment, returns and capital efficiency to deliver sustainable compounding growth. It continues to see exciting opportunities to deploy capital organically and has a good M&A pipeline.  Even after taking into consideration capital to fund organic growth, payment of dividends in line with the Company’s dividend policy and acquisitions within the M&A pipeline, the Company has substantial headroom under its facilities and target leverage of 1-2x.

As a result, the Company announces that it will launch a share buyback programme of the Company’s ordinary shares for up to a maximum aggregate consideration of £30 million (the Programme), commencing on the date of this announcement. It is expected the Programme will be completed by 15 September 2022.

The Company has entered into an agreement with Numis pursuant to which it is intended that Numis will purchase up to a maximum of 24 million ordinary shares in the Company on the Company’s behalf. Under the Programme the repurchased shares will be held in treasury.

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The Programme is in accordance with the Company’s general authority to purchase a maximum of 24,609,142 ordinary shares. Any purchase of the Company’s ordinary shares contemplated by this announcement will be carried out on the London Stock Exchange and be executed in accordance with the Company’s general authority to repurchase ordinary shares granted by its shareholders on 20 September 2021, Market Abuse Regulation 596/2014 and the Commission Delegated Regulation (EU) 2016/1052 (both as incorporated into UK domestic law by the European Union (Withdrawal) Act 2018), and Chapter 12 of the Financial Conduct Authority’s Listing Rules.

Redde Northgate plans to announce a pre-close trading update for the year ended 30 April 2022 in May 2022, ahead of the publication of its full year results scheduled for July 2022.

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