Slide 1: Full Year Results FY 2022
Full Year Results FY 2022 6 July 2022
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) has been prepared by Redde Northgate Plc (the “Company” and, together with its subsidiaries, the “Group”). For the purposes of this notice, “Presentation” means this document, its contents or any part of it, any oral presentation, any question or ans
Slide 3: Agenda
Agenda 1 Overview Martin Ward 2 Financial Review Philip Vincent 3 Business Update Martin Ward 4 Q&A Martin Ward Chief Executive Officer 5 Depreciation workshop Philip Vincent Philip Vincent Chief Financial Officer
Slide 4: Overview
Overview Martin Ward 4 Charged EV - Chesterfield
Slide 5: FY2022 Overview: Achievements
FY2022 Overview: Achievements Strong operational performance Focus, Drive & Broaden – Clear strategic progress • Growth across all business units seen in year, Increased platform scale & full service offering despite supply constraints across vehicle lifecycle • Improvement in rental margins; signif
Slide 6: FY2022 Overview: Financial performance
FY2022 Overview: Financial performance Underlying Trading • Revenues: + 24% to £1,093.6m Revenue (£m) PBT (£m) 1,094 151 • EBIT: + 53% to £167.8m • PBT: + 62% to £151.3m +24% +62% • ROCE 4.4ppt increase to 13.9% FY2021 FY2022 FY2021 FY2022 Reflecting Board confidence, full £30m share buy-back year d
Slide 7: Overview: Merger benefits delivered & growing
Overview: Merger benefits delivered & growing Platform Nov ‘19 Presentation Increased platform scale & full service offering across vehicle lifecycle Cost synergies £20m+ achieved ahead of target Revenue synergies Growth in long term contract wins from both fleet and insurance customers Milestones a
Slide 8: Financial Review
Financial Review Philip Vincent 8
Slide 9: FY 2022 Results
FY 2022 Results FY 2022 FY 2021 % change Revenue £m £m Revenue (exc. vehicle sales) 1,093.6 879.7 24% FY 2022 FY 2021 Revenue – vehicle hire £563.3m £515.6m Underlying EBIT 167.9 109.8 53% Revenue – claims and services £530.3m £364.1m Underlying PBT 151.3 93.2 62% Revenue (exc. vehicle sales) £1,093
Slide 10: Group profit waterfall – FY2021-22
Group profit waterfall – FY2021-22 (UK&I) (Spain) Disposal profits Other profits £50.1m (33%) £40.2m (43%) £101.2m (67%) £53.0m (57%) Commentary 10
Slide 11: UK&I Key Highlights
(UK&I) Key Highlights FY 2022 FY 2021 • Hire revenue 11.2% increase % change £m £m • Significant rental margin increase to 15.3%, sustainable margin Revenue – Vehicle hire 346.6 311.6 +11.2% expected to be c.15% • Higher disposal profit from high Rental profit 53.1 39.5 +34.3% sales price more than
Slide 12: Spain Key Highlights
(Spain) Key Highlights FY 2022 FY 2021 • Hire revenue 7.3% increase % change £m £m • Rental margin increased 2.5ppt to 17.5%, sustainable margin Revenue – Vehicle hire 220.6 205.5 +7.3% expected to be c.15% • Disposal profits 79.8% higher, Rental profit 38.6 30.8 +25.5% lower volume, higher price •
Slide 13: Claims and services Key Highlights
Key Highlights FY 2022 FY 2021 % change £m £m • Revenues increased with volumes by 46.3% to £543.7m Revenue – Claims and • Gross margin increased 4.6ppt 543.7 371.7 +46.3% services to 23.5% • EBIT increasing with volumes to Gross profit 127.7 70.2 +81.8% £35.6m • Investment into systems and Gross ma
Slide 14: Cashflow and capex
Cashflow and capex FY 2022 FY 2021 Change £m £m £m Underlying EBITDA 366.7 302.3 64.4 Net replacement capex1 (106.7) (107.5) 0.8 Timing of purchases with OEMs Lease principal payments (43.7) (54.8) 11.1 Vehicles £30.3m, properties £13.4m Steady state cash generation 216.4 140.1 76.3 Continuing stron
Slide 15: Well-financed to drive sustainable shareholder value
Well-financed to drive sustainable shareholder value A strong financial platform … …to allow the Group to invest, return cash to shareholders and take advantage of inorganic opportunities Net debt (inc. IFRS 16): £582.5m (2021: £530.3m) Capital allocation priorities Action in FY22 Net debt / EBITDA:
Slide 16: Depreciation rate change
Depreciation rate change • Unprecedented disruption to supply of new vehicles and strength of residual value market • Cohort of vehicles have a depreciated book value close to or below expected sales value • Depreciation rate of this cohort to be reduced • No impact on underlying PBT or cash • Statu
Slide 17: Business Update
Business Update Martin Ward 17
Slide 18: Market context
Market context UK vehicle supply market dynamics COVID-19 disruption • Uncertain market conditions favouring operators with and semi- conductor supply financial strength and diverse customer base issues resulting in a forecast 1.7m vehicles undersupply by Successfully managing complex market environ
Slide 19: Delivering services across the vehicle lifecycle
Delivering services across the vehicle lifecycle Vehicle Rental Accident Management Fleet Management, Service Vehicle Sales LCV flexible and long term Replacement vehicle hire and and Maintenance Omnichanel vehicle sales of ex claims management solutions for Rental vehicles serviced and rental in th
Slide 20: Our customers
Our customers • Partnering with a broad range of leading motor insurers, fleet operators and leasing companies • Building long term, growing services relationships through being trusted for customer excellence and efficiency • Supporting the shift from ownership to outsourcing Insurers / Brokers / D
Slide 21: Delivering platform growth through adding value to customer
Delivering platform growth through adding value to customer Why customers choose FMG Connect Fleet Management App our platform Improved cost control • Data Capture • Record keeping One-stop solution • Incidents & Accidents Ownership of overall process • Real-time Reporting • Reduce Downtime Improved
Slide 22: Recent customer wins
Recent customer wins Example #1: Why customers choose Example #2: Major Insurance brand our platform Growing fleet customer Improved cost control One-stop solution • 30 vehicle fleet, looking to expand to 70+ • Return of previous single-product • Currently with 10+ suppliers customer, but with great
Slide 23: Approach to acquisitions
Approach to acquisitions What we look for in opportunities • Scaling fleet/customers • Disciplined approach to reviewing M&A pipeline: strong financial returns • Broadening product range • Enhancing skillset & capabilities • Financial firepower allows quick responsiveness to interesting opportunitie
Slide 24: Supporting customers on their EV Transition
Supporting customers on their EV Transition Industry engagement Drive to Zero • OEMs: EV plans and technology developments in fuels & vehicles • BVRLA: industry lobbying efforts on UK regulations facilitating EV 4 Pillars of support transition Infrastructure investment Suitability analysis • Branch
Slide 25: Our sustainability journey
Our sustainability journey • Managing transition away from ICE vehicles is a key strategic task for FY2022 FY2023 our business • Allied to mitigating the direct impact we have on our people, planet and communities Enhanced our data Understanding gathering of Scope 3 • Many actions are already embedd
Slide 26: Summary: Resilience of our business model
Summary: Resilience of our business model Our positioning Offering resilience Long-term, structural Leveraging move from ownership industry drivers towards utilisation Unique, full service Attracting growing blue chip customers client proposition on long term contracts Diversified and resilient Trac
Slide 27: Looking forward
Looking forward Outlook • New financial year has started well, business well positioned • Supported by structural growth in customer outsourcing • Enjoying the benefits of the enhanced mobility solutions platform • Continuing to proactively manage inflation, resource availability and supply chain co
Slide 28: Q&A
Q&A Martin Ward & Philip Vincent 28
Slide 29: Depreciation workshop
Depreciation workshop Philip Vincent 29
Slide 30: Setting depreciation rates
Setting depreciation rates Key Points PPU £ 6,000 5,000 • Depreciation rates review at least annually 4,000 COVID • Aiming to make no profit or Lockdown 1 3,000 loss • Based on forecast disposal 2,000 proceeds 1,000 • PPUs have been very high 0 since start of COVID • Depreciation rate change FY20: F
Slide 31: Depreciation worked example
Depreciation worked example Cost 10,000 Annual depreciation charge 10% No change Year 1 Year 2 Year 3 Year 4 Total Opening net book value 10,000 9,000 8,000 7,000 Depreciation (1,000) (1,000) (1,000) (1,000) (4,000) Closing net book value 9,000 8,000 7,000 6,000 Selling price at 9,000 disposal Dispo
Slide 32: Impact of depreciation rate change
Impact of depreciation rate change £m FY23 FY24 FY25 FY26 FY27 Total Key Points Reduced depreciation 54.6 30.9 8.2 0.3 - 94.1 Reduced disposal profits (7.8) (40.4) (38.0) (7.0) (0.9) (94.1) • Statutory PBT is expected to Impact on Statutory EBIT 46.8 (9.4) (29.8) (6.7) (0.9) - increase by £46.8m in
Slide 33: Reporting & disclosure
Reporting & disclosure Statutory Adjustments Underlying £m £m £m Key Points Revenue: hire of vehicles 563.3 - 563.3 • Pro-forma based on FY22 income Revenue: sales of vehicles 149.9 (149.9) - statement and adjusted for expected Revenue: claims & services 530.3 - 530.3 FY23 depreciation rate change T
Slide 34: Depreciation Q&A
Depreciation Q&A 34