Zigup PLC · LSE:ZIG
Zigup — Northgate — FY2015 Earnings Presentation
39 slides from Zigup's earnings presentation, July 2015
Slide 1: Driving Profitable Growth
Northgate plc – preliminary results for the year ended 30 April 2015 DRIVING PROFITABLE GROWTH 1
Slide 2: Agenda
Northgate plc – preliminary results for the year ended 30 April 2015 Agenda Financial review Chris Muir Operational review - UK Bob Contreras - Spain Fernando Cogollos Outlook Bob Contreras 2
Slide 3: Financial review
Northgate plc – preliminary results for the year ended 30 April 2015 Financial review Chris Muir 3
Slide 4: Group financial summary
Northgate plc – preliminary results for the year ended 30 April 2015 Group financial summary Operating profit Profit before tax EPS Apr-15 £97.8m £85.0m 51.0p Apr-14 £72.6m £60.3m 35.1p Apr-13 £86.4m £49.5m 29.2p Dividend (full year) Net debt ROCE 14.5p £338m 13.0% FY14 – 10.0p Apr-14 – £346m Apr-14
Slide 5: Rate change impact
Northgate plc – preliminary results for the year ended 30 April 2015 Rate change impact The depreciation rate changes effective from 1 May 2012 and 1 May 2014 have resulted in an £11.4m benefit £m UK Spain Corporate Group Operating profit 69.0 33.3 (4.5) 97.8 Impact of depreciation change (8.4) (3.0
Slide 6: UK vehicle registrations
Northgate plc – preliminary results for the year ended 30 April 2015 UK vehicle registrations New vehicle registrations in 2014 returned to pre-recessionary levels, meaning that supply of vehicles into the used market will start to ease 400,000 350,000 300,000 New vehicle registrations Supply gap 25
Slide 7: Spain depreciation rates
Northgate plc – preliminary results for the year ended 30 April 2015 Spain depreciation Market conditions are expected to support residual prices in the rates medium term, therefore a further 1.0% reduction in depreciation rates has been applied prospectively from 1 May 2015 2,000 Further 1% reducti
Slide 8: Rate change impact
Northgate plc – preliminary results for the year ended 30 April 2015 Rate change impact The benefit of depreciation rate changes made in the UK in FY13 and FY15 and in Spain in FY15 and FY16 will unwind through disposal profits over the life of the vehicles £m FY16 FY17 FY18 FY19 UK: Profit on dispo
Slide 9: UK operating profit bridge
Northgate plc – preliminary results for the year ended 30 April 2015 UK Operating profit increased as a result of an increase in average vehicles on hire, the change in depreciation rate and disposing of more vehicles at an enhanced PPU (6.2) 18.9 1.5 £m (2.1) 7.8 (1.9) 69.0 51.0 Depreciation Payrol
Slide 10: UK new sites
Northgate plc – preliminary results for the year ended 30 April 2015 UK new sites We estimate that each new site will, on average, operate a fleet of 600 vehicles by the end of year three and we expect ROCE to exceed 16% in year four as the site matures No. sites Ave. age Ave. on hire 0-6 months 4 2
Slide 11: UK new sites
Northgate plc – preliminary results for the year ended 30 April 2015 UK new The 15 new sites opened since February 2013 contributed £0.2m to sites operating profit in the year. The impact on ROCE was a reduction of 1.0% £m April 2015 April 2014 Reported operating profit 69.0 51.0 New sites adjustmen
Slide 12: Spain operating profit bridge
Northgate plc – preliminary results for the year ended 30 April 2015 Spain The growth in operating profit is predominantly as a result of higher average vehicles on hire, the change in depreciation rate and an increased volume of disposals at enhanced PPU 9.2 €m 10.1 0.8 (6.4) (0.1) 43.0 (1.0) 30.4
Slide 13: Cash flow
Northgate plc – preliminary results for the year ended 30 April 2015 Cash flow Net underlying cash generation was £4.4m. After taking into account a favourable exchange impact of £28.8m net debt closed at £337.8m with gearing of 81% compared to 91% at April 2014 £m £4.4m 12.2 28.8 14.6 218.4 (1.9) 3
Slide 14: Operational review: UK
Northgate plc – preliminary results for the year ended 30 April 2015 Operational review: UK Bob Contreras 14
Slide 15: Operational highlights
Northgate plc – preliminary results for the year ended 30 April 2015 Operational highlights Our main focus continues to be on improving customer service and targeting growth with SME customers Vehicles on hire Customers Utilisation +1,000 +29% 88% since April 2014 in last two years (FY14 – 88%) Vehi
Slide 16: Customer evolution
Northgate plc – preliminary results for the year ended 30 April 2015 Customer evolution Our strategy of targeting growth through SMEs has seen an increase in customer numbers of 29% over the past two years VOH April April April April 2015 % 2014 % 2013 % 2012 % Over 100 16,100 33% 16,900 36% 16,100
Slide 17: Customer satisfaction
Northgate plc – preliminary results for the year ended 30 April 2015 Customer satisfaction Net promoter score measures customer satisfaction, is monitored on a site by site basis and is supported by the three key areas of our customer proposition 50% 45% 40% 45% 35% 30% 25% 20% 15% 10% 5% 14% 0% Apr
Slide 18: Vehicle sales evolution
Northgate plc – preliminary results for the year ended 30 April 2015 Vehicle sales evolution PPU for the year was £1,583. As the availability of used vehicles is expected to increase, our focus remains on increasing retail penetration in order to manage this market dynamic April 2015 April 2010 Diff
Slide 19: Network expansion
Northgate plc – preliminary results for the year ended 30 April 2015 4,000 16 Network 3,500 VOH 14 expansion No. sites open 3,000 12 2,500 10 No. sites open VOH 2,000 8 • 15 sites opened since Feb-13 1,500 6 • Total 3,900 VOH at Apr-15 1,000 4 • Growth of 1,900 in the year 500 2 0 Feb-13 May-13 Aug-
Slide 20: Network expansion
Northgate plc – preliminary results for the year ended 30 April 2015 Network expansion • Site openings in the London area now largely complete • Sites opened in Dartford, Brighton, Manchester and Birkenhead in H2 of FY15 • Opportunities for c.14 further sites across the UK • Potential sites will hav
Slide 21: Operational review: Spain
Northgate plc – preliminary results for the year ended 30 April 2015 Operational review: Spain Fernando Cogollos 21
Slide 22: Operational highlights
Northgate plc – preliminary results for the year ended 30 April 2015 Operational highlights The Spanish economy continues to show signs of improvement and the focus is now on growing our customer base in the SME sector Vehicles on hire Customers Utilisation +900 +22% 91% since April 2014 since April
Slide 23: Customer evolution
Northgate plc – preliminary results for the year ended 30 April 2015 Customer evolution Growth of 22% in customer numbers in the year predominantly from SMEs demonstrates a wider recognition and acceptance of our proposition within this key market VOH April April April April 2015 % 2014 % 2013 % 201
Slide 24: Customer satisfaction
Northgate plc – preliminary results for the year ended 30 April 2015 Customer satisfaction A significant improvement in customer satisfaction over the previous two years reflects the focus we have put into this key area of our business 40% 35% 30% 25% 20% 34% 15% 10% 5% 13% 0% Apr-13 Apr-15 24
Slide 25: Vehicle sales evolution
Northgate plc – preliminary results for the year ended 30 April 2015 Vehicle sales evolution PPU has increased to €1,554 in the year. The medium term ambition is for the Spanish business to match the retail sales percentage achieved in the UK April 2015 April 2010 Difference Retail % 16 2 14 Van Mon
Slide 26: ROCE
Northgate plc – preliminary results for the year ended 30 April 2015 ROCE X.X% ROCE risen from 8.4% in FY13 to 12.8% in FY15. This is in excess of Group WACC, which stands at 6.7% at 30 April 2015 ROCE FY15 12.8% FY14 9.2% FY13 8.4% 26
Slide 27: Outlook
Northgate plc – preliminary results for the year ended 30 April 2015 Outlook Bob Contreras 27
Slide 28: Outlook
Northgate plc – preliminary results for the year ended 30 April 2015 Outlook In the UK we will continue to build on commercial improvement and network development X.X% 9.2% In Spain the focus has progressed to driving organic growth We will continue to target progressive dividends within the dividen
Slide 29: Questions
Northgate plc – preliminary results for the year ended 30 April 2015 Questions 29
Slide 30: Financial summary
Financial summary Appendix 1 £m April 2015 April 2014 UK Spain Total Total Revenue: hire of vehicles 311.3 145.5 456.8 442.3 Operating profit (excluding vehicle disposals) 41.2 21.0 62.2 50.8 Vehicle disposals 27.8 12.3 40.1 25.7 Total operating profit 69.0 33.3 102.3 76.5 Corporate - - (4.5) (3.9)
Slide 31: Capital employed
Capital employed Appendix 2 £m UK Spain Group Vehicles (hire and used) 470 206 676 Property 28 28 56 Other fixed assets 15 3 18 Trade and other debtors 67 25 92 Trade and other creditors (64) (14) (78) Capital employed 516 248 764 Net debt (223) (115) (338) Net assets 293 133 426 ROCE 14.1% 12.8% 13
Slide 32: Facilities and borrowing cost
Facilities and borrowing cost Appendix 3 £m April 2015 Rate* Syndicated bank facilities 506 Other facilities 18 524 Fixed rate borrowings 256 3.0% Floating rate borrowings 83 2.2% Net debt (excluding arrangement fees) 339 2.8% Headroom 185 * Rate as at 30 April 2015 32
Slide 33: Financial covenants
Financial covenants Appendix 4 Interest cover Leverage Loan to value 8.00 2.00 70% 7.00 60% 6.00 1.50 50% 5.00 40% 4.00 1.00 30% 3.00 20% 2.00 0.50 1.00 5.6x 7.8x 1.5x 1.4x 10% 50% 46% 44% 44% 0.00 0.00 0% Apr-14 Apr-15 Apr-14 Apr-15 Apr-14 Apr-15 • EBIT headroom £59m • EBITDA headroom £71m • Loan h
Slide 34: Operating cash flows
Operating cash flows Appendix 5 £m April 2015 April 2014 Operating profit (statutory) 95.8 63.5 Depreciation and amortisation 146.5 168.2 Working capital and other movements 9.3 3.7 Cash generated from operations 251.6 235.4 Net interest paid (12.3) (11.3) Corporation tax paid (16.5) (4.3) Cash flow
Slide 35: Group fleet capital expenditure
Group fleet capital expenditure Appendix 6 £m April 2015 April 2014 Purchases UK 242.2 201.2 Spain 108.5 99.8 Disposals UK (115.1) (90.7) Spain (42.4) (38.5) Net fleet capex 193.2 171.8 Vehicles: Purchases UK 19,800 17,000 Spain 12,400 10,700 32,200 27,700 Disposals UK 17,600 14,000 Spain 10,300 8,3
Slide 36: UK KPIs
UK KPIs Appendix 7 April 2015 April 2014 Fleet size (closing) 56,100 53,900 Utilisation (average) 88% 88% Closing vehicles on hire 48,600 47,600 Revenue per vehicle £6,157 £6,131 Operating margin 22.2% 17.4% Headcount (closing) 2,057 1,968 PPU £1,583 £1,427 ROCE 14.1% 11.2% 36
Slide 37: Spain KPIs
Spain KPIs Appendix 8 April 2015 April 2014 Fleet size (closing) 39,400 37,800 Utilisation (average) 91% 92% Closing vehicles on hire 35,600 34,700 Revenue per vehicle €5,301 €5,399 Operating margin 22.9% 17.1% Headcount (closing) 914 865 PPU €1,554 €821 ROCE 12.8% 9.2% 37
Slide 38: New branch assumptions
New branch assumptions Appendix 9 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 Costs £ Closing on rent - 240 410 540 540 540 Average fleet - 145 375 530 600 600 Non fleet site CAPEX 125k Closing fleet - 290 460 600 600 600 Depreciat
Slide 39: New branch annual impact
New branch annual impact Appendix 10 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 / repairs - (98) (258) (371) (429) (437) Other direct costs - (58) (152) (219) (253) (258) Staff costs (51) (305) (414) (422)