Zigup PLC · LSE:ZIG
Zigup — Northgate — FY2014 Earnings Presentation
38 slides from Zigup's earnings presentation, June 2014
Slide 1: Northgate plc: Return to growth
Northgate plc Return to growth Preliminary results for the year ended 30 April 2014 Northgate plc Preliminary results Year ended 30 April 2013 June 2013
Slide 2: Agenda
Agenda • Group summary Bob Mackenzie • Financial review Chris Muir – Depreciation • Operational review – UK Chris Muir – Spain Fernando Cogollos • Outlook Bob Mackenzie 2
Slide 3: Group summary
Bob Mackenzie: Chairman Group summary
Slide 4: Performance in the year
Performance in the year EPS • PBT £60.3m compared to £49.5m last year • EPS increased from 29.2p 35.1p 29.2p to 35.1p FY13 FY14 Dividend per share • Continued dividend growth 102% 7.3p 91% 10.0p FY13 FY14 4
Slide 5: Financial performance
Chris Muir: Group Finance Director Financial performance Northgate plc Preliminary results Year ended 30 April 2013 June 2013
Slide 6: Group financial summary
Group financial summary Operating profit Profit before tax EPS £86.4m £72.6m £49.5m £60.3m 29.2p 35.1p FY13 FY14 FY13 FY14 FY13 FY14 Dividend (full year) Net debt ROCE 10.0p £346m 9.9% FY13 – 7.3p Apr-13 – £363m FY13 – 11.8% 6
Slide 7: UK operating profit
UK operating profit The UK underlying operating margin reduced to 17.4% (2013 – 22.1%) as a result of upfront investment in new sites and strengthening of the commercial and operational teams. 1.3 £m (1.8) (2.4) (0.8) (6.4) (3.1) 64.2m 51.0m Depreciation Other direct Revenue disposals Payroll FY13 F
Slide 8: Spain operating profit
Spain operating profit Trading conditions in Spain are showing signs of improvement with our underlying operating margin increasing to 17.1% (2013 – 16.7%) 0.7 3.1 (0.5) (2.0) €m 4.2 (5.9) 30.8m 30.4m Depreciation Other direct FY13 disposals FY14 Payroll Revenue Overheads Vehicle costs 8
Slide 9: Interest and net debt movement
Interest FY13 £m (6.5) (2.0) Non-cash Non-utilisation 0.2 FY14 (15.8) Exchange (0.4) Rate Net debt 2.8%* 2.8%* 3.0%* Non-cash 6.5 - Non-utilisation 2.6 0.6 Reduction £24.5m Cash 27.8 11.8 Total 36.9 12.4 * Closing weighted average borrowing rate inclusive of swaps where appropriate 9
Slide 10: Cash flow and net debt
Cash flow and net debt Net debt £m Opening net debt (1 May-13) 362.7 Apr-14 £346m Pre-dividend cash flow (22.6) Apr-13 £363m Dividend 12.2 Other non-cash movements (0.6) Apr-12 £371m Exchange movements (5.6) Closing net debt (30 Apr-14) 346.1 Gearing Facilities headroom 92 Apr-14 91% June 2014 refin
Slide 11: UK depreciation rates
UK depreciation rates 2,000 1% rate reduction 1,500 Pre-impairment Post impairment 1,000 500 PPU (£) 0 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 -500 -1,000 • 2014 PPU at £1,427 • Expect market conditions and increasing retail penetration to support residual prices in medium term • Rate reduction of
Slide 12: UK depreciation rates - impact
UK depreciation rates - impact Apr-14 £m – May 14 FY15 FY16 FY17 FY18 Closing fleet 53,900 Depreciation 10.9 10.9 10.9 10.9 Closing cost £605.7m Profit on disposal (1.8) (5.5) (9.1) (10.9) 2014 average rate 19.0% Operating profit 9.1 5.4 1.8 - Revised rates 17.2% Year-on-year 9.1 (3.7) (3.6) (1.8) H
Slide 13: Spain depreciation rates
Spain depreciation rates 1,000 Pre-impairment Post impairment 500 PPU (€) 0 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 -500 -1,000 -1,500 -2,000 • 2014 PPU at €821 • Expect market conditions to support residual prices in medium term • Rate reduction of 0.9% prospectively from 1 May 2014 13
Slide 14: Spain depreciation rates - impact
Spain depreciation rates - impact Apr-14 Closing fleet 37,800 Closing cost £366.1m 2014 average rate 19.8% Revised rates 18.9% Holding period 42 months £m FY15 FY16 FY17 FY18 FY19 Depreciation 3.3 3.3 3.3 3.3 3.3 Profit on disposal (0.5) (1.4) (2.4) (3.2) (3.3) Operating profit 2.8 1.9 0.9 0.1 - Yea
Slide 15: Operational review: UK
Chris Muir: Group Finance Director Operational review: UK Northgate plc Preliminary results Year ended 30 April 2013 June 2013
Slide 16: UK operational highlights
UK operational highlights Vehicles on hire Utilisation Revenue p/v +4,500 88% +1% since April 2013 (2013 – 88%) compared to 2013 Vehicle sales ROCE Commercial 14,000 11.2% 4 new sites at improved values (2013 – 14.8%) opened in the year Focus on driving growth in the UK 16
Slide 17: Driving growth in the UK
Driving growth in the UK • Growth in VOH of 4,200 from regional customers • Growth in VOH of 300 from national customers • Customer numbers increased by 21% since Commercial Apr-13 • Improved residual values • Increased retail penetration from 22% to 27% of sales • Target of 30% Vehicle Sales 17
Slide 18: Employee engagement
Employee engagement Employee engagement is being enhanced through: • Improving communication in order to help employees understand their role in delivering the proposition; • Induction procedures; • Recognition, and • Reward/share ownership. 18
Slide 19: Customer satisfaction
Customer satisfaction • Focus on customer service • Net promoter score on a site by site basis • Three key areas – ‘the proposition’ Net promoter score evolution 40% 35% 30% 25% 20% 15% 10% 5% 0% Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 19
Slide 20: Network expansion: progress to date
Network expansion: progress to date Vehicles on hire from new sites Growth of 2,000 (1,800 in FY14) 2,000 1,800 1,600 1,400 Wimbledon: opened Apr-14 FY13 FY14 1,200 1,000 800 600 400 200 Slough: opened Jul-13 20
Slide 21: Network expansion
Network expansion • Continued focus on London area • Potential for up to 13 sites in London area (currently 9 open) • Opportunities for at least 18 further sites across the remainder of the UK to fill regional gaps • Potential sites will have to meet minimum 16% ROCE threshold target 21
Slide 22: Operational review: Spain
Fernando Cogollos: Managing Director Northgate Spain Operational review: Spain Northgate plc Preliminary results Year ended 30 April 2013 June 2013
Slide 23: Spain operational highlights
Spain operational highlights Vehicles on hire Revenue p/v Utilisation +2,600 -1% 92% since April 2013 compared to 2013 (2013 – 90%) Vehicle sales Retail vehicle sales ROCE 8,300 16% 9.2% at improved values (2013 – 9%) (2013 – 8.4%) 23
Slide 24: Progress against actions to improve ROCE
Progress against actions to improve ROCE • Customer numbers increased by 20% through targeting SME business • Construction industry reliance 28% (31% at Apr-13) • Improvement in customer profiling to benefit returns Commercial • Maintain utilisation above 90% (92% achieved) • Workshop efficiency pro
Slide 25: Outlook
Bob Mackenzie : Chairman Outlook Northgate plc Preliminary results Year ended 30 April 2013 June 2013
Slide 26: Outlook
Outlook Continue to build on commercial improvement UK and branch expansion Continue to take actions to grow and increase Spain ROCE Maintain progressive dividend policy whilst Dividend investing organically to strengthen and grow returns UK provides medium term growth opportunity Outlook whilst ROC
Slide 27: Questions
Questions N@RTHGATE 27
Slide 28: Financial summary
Appendix 1 Financial summary £m April 2014 April 2013 UK Spain Total Total Revenue 292.4 149.9 442.3 441.9 Operating profit (excluding vehicle disposals) 31.0 19.8 50.8 63.6 Vehicle disposals 20.0 5.7 25.7 25.8 Total operating profit 51.0 25.6 76.5 89.4 Corporate - - (3.9) (3.0) Group operating prof
Slide 29: Capital employed (April 2014)
Appendix 2 Capital employed (April 2014) £m UK Spain Group Vehicles (hire and used) 412 216 628 Property 28 34 62 Other fixed assets 16 4 20 Trade and other debtors 62 33 95 Trade and other creditors (54) (14) (68) Capital employed 464 273 737 Net debt (212) (134) (346) Net assets 252 139 391 ROCE 1
Slide 30: Exceptional items
Appendix 3 Exceptional items £m April 2014 April 2013 DB pension scheme settlement 2.4 - Net property losses & impairment 2.0 0.4 Restructuring costs – UK 1.4 2.1 Restructuring costs – Spain 0.4 0.8 Exceptional operating costs 6.2 3.3 Exceptional financing costs - 54.0 Total exceptional items 6.2 57
Slide 31: Facilities and borrowing cost
Appendix 4 Facilities and borrowing cost £m April 2014 Syndicated bank facilities 422 Other facilities 16 438 rate Fixed rate borrowings 276 3.1% Floating rate borrowings 70 2.7% Net debt 346 3.0% Headroom 92 31
Slide 32: Financial covenants
Appendix 5 Financial covenants Interest cover Leverage Loan to value 6.00 2.00 70% 5.00 60% 4.00 1.50 50% 3.00 40% 1.00 30% 2.00 20% 0.50 1.00 2.7x 5.6x 2.7x 5.6x 1.5x 1.5x 10% 50% 46% 0.00 0.00 0% Apr-13 Apr-14 Apr-13 Apr-14 Apr-13 Apr-14 • EBIT headroom £33m • EBITDA headroom • Loan headroom £177m
Slide 33: Operating cash flows
Appendix 6 Operating cash flows £m April 2014 April 2013 Operating profit (statutory) 63.5 79.5 Depreciation and amortisation 168.2 167.3 Working capital and other movements 3.7 11.6 Cash generated from operations 235.4 258.4 Net interest paid (11.3) (31.3) Corporation tax paid (4.3) (16.8) Cash flo
Slide 34: Group fleet capital expenditure
Appendix 7 Group fleet capital expenditure £m April 2014 April 2013 Purchases UK 201.2 186.7 Spain 99.8 72.3 Disposals UK (90.7) (124.6) Spain (38.5) (43.4) Net fleet capex 171.8 91.0 Vehicles: Purchases UK 17,000 16,500 Spain 10,700 7,300 27,700 23,800 Disposals UK 14,000 20,700 Spain 8,300 11,200
Slide 35: UK KPIs
Appendix 8 UK KPIs April 2014 April 2013 Fleet size (closing) 53,900 49,900 Utilisation (average) 88% 88% Closing vehicles on hire 47,600 43,100 Revenue per vehicle £6,131 £6,063 Operating margin 17.4% 22.1% Headcount (closing) 1,968 1,835 PPU £1,427 £1,003 ROCE 11.2% 14.8% 35
Slide 36: Spain KPIs
Appendix 9 Spain KPIs April 2014 April 2013 Fleet size (closing) 37,800 35,100 Utilisation (average) 92% 90% Closing vehicles on hire 34,700 32,100 Revenue per vehicle €5,399 €5,562 Operating margin 17.1% 16.7% Headcount (closing) 865 858 PPU €821 €544 ROCE 9.2% 8.4% 36
Slide 37: New branch - assumptions
Appendix 10 New branch 1 - assumptions Revenue £ No. Yr. 0 Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Revenue pv on rent 6,163 Average on rent - 122 334 472 534 534 Closing on rent - 240 410 540 540 540 Costs £ Average fleet - 145 375 530 600 600 Non fleet site CAPEX 125k Closing fleet - 290 460 600 600 600 Depr
Slide 38: New branch - annual impact
New branch 2 – annual impact Appendix 11 Yr. 0 Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Revenue - 751 2,077 2,966 3,391 3,425 Depreciation - (292) (769) (1,109) (1,280) (1,306) Maintenance / repair - (98) (258) (371) (429) (437) Other direct costs - (58) (152) (219) (253) (258) Staff costs (51) (305) (414) (42