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following the difficult 2008/2009 period. The shares trade for ₤2.6, enterprise value* is ₤772.9m. The multiples are:
________________________________________________________________________ EV*/EBITDA** x2.65 EV/FCF x5.7 EV/EBIT x8.2 EBIT/EV 12.2% P/E x8.8
* Net debt amounting to ₤418.5m (₤385.3 excluding operating leases) and diluted shares as of April 2012 (136.31 million) have been considered for the calculation of market capitalization and EV ** EBITDA (EBIT + Depreciation + Amortization), EBIT (operating profit after exceptional expenses), FCF (operating cash flow, after vehicle sales and purchases less maintenance capex) are calculated based on April 2012 results. THE INVESTMENT THESIS: 1 - Northgate trades below private market value while it offers a sensible foothold in UK and Spain - two countries in which some of the major players enjoy either glorious or (surprisingly) inglorious market positions (more details later in the document). As a general trend the industry is undergoing a process of consolidation with some deals completed in 2011 (Avis/Avis Europe, Hertz/Donlen, Avis/Apex, Alphabet/ING Fleet, ARI/Fleet Support) or undergoing (Hertz/Dollar Thrifty). It appears that there is a gap between the current trading multiples of Northgate and the multiples paid by CAR for Avis Europe or proposed to be paid by HTZ for DTG. - Avis purchased Avis Europe at ~13 times earnings; - Hertz offered DTG about 15.3 times earnings (2012 estimated earnings of DTG); - DTG, CAR & HTZ trade at x13, x14, and x19 P/E (source: Reuters) A buyer of Northgate would acquire: - sensible enhancement of the UK and Spanish market positions. Northgate is (arguably) the largest independent player in UK and probably in Spain, too (details later in the document);
an EBIT / EV yield of 9. or ~13. . .due as soon as November 2012). During 2008-2012 Northgate produced on average ₤115m of free cash flow and ₤322m of EBITDA: ______________________________________ Million 2012 2011 2010 2009 ₤ EBITDA* 291 309 306 363 FCF 136 95 182 163 .₤5.a little extra on the side .the inglorious market positions of some major players in UK and Spain. or 3.1% (at ₤4/share) and profits with room for improvement if. 2 .5 . If. a network of 62 locations in UK.31 times EV/EBITDA (as of April 2012).the consolidation trend.In October 2012 the Times printed that Avis might be offering to buy Northgate for ₤4/share (a 54% premium to current price).110% to current market price Rumor .5-4 times EBITDA (£600-£746 million equity value).On a stand alone basis equity value shall grow with debt reduction (scheduled bank repayments of £68m . cost of debt is reduced from the current 7.8% (at an acquisition price of ₤4/share).5 times earnings.1% achieved on average by NTG..5m. . especially given: .a portfolio of more than 4. those assets are as attractive as I think they are.000 customers. … then maybe Northgate is worth more than ₤2. .6/share and maybe a multiple of 3.5/share would be closer to fair value and would provide a premium of 69% . meaning ₤4.a respectable stream of free cash flow FCF/EV yield of 14.the ’’Van Monster’’ retail sales network which operates eight locations in UK and five in Spain. 23 in Spain.16% of total finance obligations . That would value the company at ~£545m market cap. or better if fundamentals improve further: The current Enterprise Value is about ₤773m of which net debt + leasing ₤418. for instance.
1% ₤5.68 times.Enterprise value of the company remains .65 times .price per share = ₤3.6 the IRR is close to 29% (assuming no dividends are paid during the next three years).06 (FCF yield of 24.3 April 2012).7%) Not expensive multiples and decent return. .EBITDA multiple = 1.outstanding shares will be 138.9 .FCF is ₤291m. .47. *** The analysis below tries to evaluate the performance of the business and the risks. Then the equity of Northgate would be valued around the rather not expensive multiples of: .EBITDA is .2) 115 _____________________________________ * EBITDA = EBIT + Depreciation + Amortization + Impairment of intangible assets (2011.2008 Average 340 322 (1.6 (vs 136.88 . . EXIT @ 29% IRR Assuming that in three years time: ₤773m. REVIEW OF THE BUSINESS .equity value (no debt outstanding) = ₤552m.and debt is fully paid back.price per share = FCF yield = 17.FCF multiple = 4.FCF multiple => 773/136 = 5.EBITDA multiple => 773/291 = 2.2009). . ₤136m annually. EXIT @ 15% IRR Maintaining the same assumptions as above except enterprise value which I have assumed now to be ₤552m in three years’ time then the resulting IRR of 15% is accompanied by: . If the entry price per share is ₤2. .
The turnaround is illustrated by the numbers below: _____________________________________________________________________________ Year Vehicles TREV AARPV FCF Net Debt WC EBIT . upon the receipt of the equity raising proceeds). plumbing and equipment maintenance service sectors (in April 2012 the construction had a weight of 34% of vehicles on hire as compared to 37% in 2011 and 55% in 2010).750. During summer 2009 (fiscal 2010) the company had to defer the testing of covenants. source: BCA . a new chairman was appointed. During fiscal 2010 the CFO who had joined in 2008 became CEO.the organizational restructuring of the company . .by consolidation of 20 operating companies in UK and two in Spain accompanied by putting all the services under one brand.European Used Car Market Report). .918 from 3. fostered by a radical drop in residual values (‘‘used car auction prices fell by ₤1.600 and Spain 62. and electrical. as well as a new CEO and a new CFO in Spain.000/unit in the second half of 2008’’. implementation of company wide ERP and centralization of customer service. The tide has turned.obtaining a certain diversification away (mainly Spain) from customers operating in construction industry by increases in wholesale and retail distribution.402 in 2009.Following nine years of consecutive growth.350 vehicles in 2008 of which UK 68. . in 2011 CEO’s compensation was linked to ROCE and net debt levels) barred a strategy that promoted ‘‘market share first’’ and promoted a new one which could be summarized by a ‘‘leaner but fitter’’ slogan. raised new equity (₤108m) and has agreed new lending facilities (£880 million. This management team (whose compensation is currently linked to ROCE and EPS. Deleveraging.reducing the number of personnel to 2. By comparison Dollar Thrifty affirms vehicle utilization of 80-83%. Northgate’s fleet peaked at 131.The fleet size decreased by 30% during 2008-2012 but the rental revenues decreased only by 13% due to the raising of the average rental prices and management of the assets that achieved 88-90% utilization of the vehicles (by selling excess vehicles and better management of the fleet).closing down some locations in both UK and Spain . positive free cash flow generation and the improvement of the bottom line (and ROCE) have been achieved via: . which became effective.
566 5.6m (April 2012) vs.3)m in April 2011 and (₤10. The CEO is remunerated with ₤375.4)m versus (₤22.9)m versus (₤5. Starting 2013 the CFO is remunerated with ₤200. of £17m.058 4.Interest cover at 30 April 2012 was 2.000. deferred shares. WC = working capital (current assets less cash .300 104. Calculated by dividing rent revenues of the year by average fleet for the year ((beginning balance + closing balance)/2) FCF = free cash flow .1x) with EBIT headroom.3)m in April 2010.07)m in April 2010. ₤56.4x (2011 . . o covenants could still turn sour if the business experiences temporary setbacks: ‘‘.000 707 716 750 771 775 715 523 5.300 111. Employees can participate in a share scheme where they receive one share free for one purchased.374 5.000 if certain performance targets are achieved. Net impairment of receivables at (₤4.2)m versus (₤4. all else being equal.700 109.710 5.current liabilities less short term debt) _________________________________________________________________________________________________ These good feats are accompanied by: o allowance for doubtful receivables still large at (₤20.2. Bad debt at (₤3.000 in basic salary + ₤56.000 (including cash. rent revenues + revenues from disposal of used vehicles (for 2006.2)m in April 2011 and (₤17. Operating cash flow (after vehicle sales and purchases) less other investments. o dilutive potential of various performance may go up to 10% (momentarily 2. 2007 the income statement did not include them so I plugged in the amounts corresponding to sales of vehicles from the cash flow statement) AARPV = Average annual rent per vehicle. performance shares bonuses) if certain performance targets are achieved.108 5.8m (April 2011).08)m in April 2010. o higher administrative expenses ₤60.300 131.350 120. o decrease of rental rates in Spain by 2% during April 2012 -Sep 2012.3%) of the shares.000 in basic salary + ₤96.320 5.pcs ₤m ₤/year/veh ₤m ₤m ₤m ₤m _____________________________________________________________________________ 2012 2011 2010 2009 2008 2007 2006 91.000 in pension but can make ₤520.000 in pension but can make ₤ 1.46)m in April 2011 and (₤12.535 136 95 182 163 -1 -37 4 385 529 615 936 894 755 524 51 62 62 185 124 126 63 94 83 71 -118 118 107 73 _____________________________________________________________________________ TREV = total revenues.800 123.
3x (2011 .5 tones). worth . of £132m.’’ (AR 2012). all else being equal.7x) with EBITDA headroom. The fact they declared a small dividend (₤0.Headroom at 30 April 2012 was . The company will pay down ₤68m of debt in Nov 2012 which shall deliver a bit more headroom for these covenants.Loan to value at 30 April 2012 was 53% (2011 . all else being equal..Debt leverage cover at 30 April 2012 was 1. o a reduction in the fleet size which may influence the bargaining position with car manufacturers. and their manner of approaching the light commercial vehicles segment (vans up to 3.Minimum tangible net £99m (2011 . The table below presents the total fleet size for each player that operates more than 3. . o the defined contribution pension scheme currently shows small surplus but was negative during 2008-2009. Figure ‘‘1’’ means that they are active in that sub segment: R L = Rental = Leasing a FM = Fleet Management _________________________________________________________________ _____________________________________ Rank Owner Fleet Size R L FM Company _________________________________________________________________ _____________________________________ 1 A charity 590.£85m).63%) giving net debt headroom. MAIN RISKS DECLINE IN RENTAL PRICES In the UK the British Vehicle Rental and Leasing Association (BVRLA) published a member directory 2013 which contains information (not very exact but still meaningful) with regard to the fleet sizes of its members as well as the market segments in which they operate. of £97m.000 Motability .1.000 vehicles.03/share) in June 2012 must show some confidence (rather than lack of rationality).
000 1 1 10 55.900 1 1 1 Northgate _________________________________________________________________ ______________________________________ 12 Hitachi Group 51.470 1 1 1 .144 16.2 Lloyds 3 BNP Paribas 296.937 Eurazeo (RF.656 MBO/Lloyds Development Capital 17 18 19 20 20.900 15 39.645 6 Societe Generale 7 60.Inchcape GE Europcar Leasedrive Avis Peugeot Hertz Thrifty 13 50.000 1 British Telecom.427 24.616 66.886 - 1 1 1 1 1 1 1 1 - 1 1 1 1 1 - Lex Arval Leaseplan Alphabet Ald BT Daimler Arnold Clark Enterprise 4 135. spin off 2002 8 Daimler Group 9 Sir Arnold Clark 57.720 VW & Friedrich von Metzler 5 BMW 112.000 Inchcape Group (LSE: INCH) 14 GE Capital 49.973 55.000 Enterprise Holdings _________________________________________________________________ ______________________________________ 11 LSE: NTG 52.239 24.961 167.PA or RF FP) 16 34.518 1 1 1 1 1 1 1 1 1 Hitachi Ifs.
409 6.000 4.287 6.com/s/3hfiz4s0q6ft5i5/Market%20Data.965 13.000 (the full table which shows the players’ presence in: cars.dropbox.951 10.817 6.100 5.950 4.049 1 1 - 1 1 1 1 1 1 1 1 1 1 1 - 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Fleet Log Fraikin Carillion Burnt-Tree Ogilvie-Fleet DCH Grosvenor FHS Fleethire Pendragon Translinc Budget Clm Jct TVR Tuskerdirect Hiregate Shb TCH FG Sixt 1 - _________________________________________________________________ _____________________________________ Total 2.the top 5 players (+100.5 million vehicles (which I assume to be the total market): (i) .762 8.587 3.060 7. heavy commercial vehicles and minibuses is available for download as an Excel file at : https://www.21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 15.915 7.xls) There are about 500 members of BVRLA operating 2.866 9.165 7.500.000 14.500 5.243 10.000 6.000 fleet) control 52% of the market and are owned by major multinationals (notwithstanding a .955 19 27 20 _________________________________________________________________ _____________________________________ BVRLA 2.141.936 3.115 6.
The argument presented above under (ii) stand for the players in this group which are smaller than Northgate.All in all the risk of decline in rental prices stands but it is rather a ‘‘business as usual’’ risk than something imminent. (ii) . None of them seems interested in the R (rent) segment (where Northgate conducts substantially all of their business) but in the more secure long term L (leasing) and FM (fleet management) segments.000 vehicles) control about 22% market share (by fleet size). Should any of them (or a few) move towards the R segment then a decline in the rental prices may follow.771 vehicles.000 vehicles but lower than 100. Conclusion UK . This cohort shall pose a lesser threat since if they act towards lowering rental prices they might be hurt themselves. All of the players larger than Northgate (other than Arthur Clarke which combines car trading with fleet activities) are owned by multinationals. Northgate for instance was listed with 75. ranks 11th in the total table (notwithstanding the Spanish fleet) (but I am inclined to think that they actually belong higher . Northgate.the middle segment consists of 20 companies which operate fleets larger than 20. Avis and Hertz rank lower than 14th position.the bottom 15 players in the table (fleets between 3. According to Northgate’s annual reports the hire rate increase in 2012 was 4% (added to 4% increase in 2011) but some customers moved to smaller vehicles so due to the mix influence the average hire revenue per vehicle increased by only 3% in the UK. Interestingly GE.000 vehicles) + 459 others (which operate fleets of less than 3. as a general rule multinational companies are less inclined to lower prices to gain market share (but rather grow through acquisitions). posing a threat to Northgate specifically.the BVRLA data on fleet sizes seems a bit outdated / larger than actuals. topped by 5 players in this group. although they only have 52. (iii) . Unless I am wrong.000 20. . In the Interim Management Statement (Sep 2012) the management reveals that ‘‘Hire revenue per rented vehicle has remained stable since the beginning of the financial year’’.000.900). On the other hand rather than distorting the market they may look around for acquisitions (or if one distorts the market by lower prices others may defend through acquisitions) and Northgate qualifies as a target.telecom company and a charity).
FYI) ________________________________________________________ Vehicles Leaseplan Arval Ald Northgate* ING** RCI Banque Peugeot Alphabet Athlon Citroen Sixt 119.918 9.300 240. I am inclined to take this as a ballpark ranking not a bullet proof one. Even if the table above misses some smaller players Northgate seems to command 8.000 848.125 52.718 84.000 59.aerenting.766 13.In June 2011 Fleet Europe (a good quality publication) provided an overview of the industry throughout Europe from which I harvested some data to construct the table below: Table 2 .300 Spain 85.000 vehicles in Oct. represent around 99% of it.939 38.500 43.613 10.558 57.000 2.422 9.700 GE (Europe only) Daimler Total 326. According to the Spanish Association of Car Renting (www.000 301.917 10.000 185.6% of total market by fleet-size.500 245. 2012 and its 23 members.900 49.700 1.400.947 Global 1.es) the vehicle renting market encompassed approximately 445. No 54 * from the Annual Report 2012 ** purchased by Alphabet in 2011 Northgate appears to be the 4th largest player in Spain.000 7.588 479.828 21.000 212.269.243 7.400 29.000 667. June 2011.300 178.293.710 91.000 489.019 UK 134.Fleets Spain (+ UK and Global.875 80.SPAIN . .868 4.000 ________________________________________________________ _________________________________________________________ _________________________________________________________ Source: Fleet Europe.
FGA Capital .pressure on vehicles that are less fuel efficient. but no crisis expected. However. But the market is more difficult currently and Northgate has already experienced a decline of 2% in rental prices during April 2012 .calameo.residual values stabilized. to be monitored closely. Arval .recovering but not to pre-crisis levels.Sep 2012 (latest Interim Management Statement). page 14 (June 2012) of Fleet Europe shows that after experiencing a large decline in second half 2008/first half 2009 the used car prices rebounded but they are still below pre-cris level. The arguments and conclusion for UK above shall stand for Spain. No 58 of Fleet Europe available here: http://en. What happens next? I think that venturing an opinion on the matter is as simple as stating the future range for S&P 500. Daimler . owing to the same no 58 of Fleet Europe’s marathon interview with the CEO’s of (mostly) top European players we can learn their opinions on the big picture: Question: ‘‘ How do you see the residual values? CEOs’ answers: Ald .the past 2 years showed that risk reward needs to be included in the leasing price.quite uncertain.not expected to recover pre-crisis levels. Athlon . Alphabet . Sixth . KBC Autolease .due to commercial policies on new vehicles RV could be under pressure (he must mean cheap new cars) Business Lease .seem to have stabilized since 2010. WITHSTAND DECLINE IN USED CAR PRICES? The Arval used car market index printed in no 58.com/read/00119162289f9102171de . too.stable with a trend to increase.
age and maintenance of vehicles). Further reducing debt (₤68m scheduled in November 2012) might bring some release to the matter. Price and liquidity of used vehicles depend up to a certain extend by a number of factors described under ‘‘Liquidity’’ below: obsolescence. They did not say the precise percentage of the retail sales handled through the ’’Van Monster’’ retail sales network (eight locations in UK and five in Spain). car manufacturer programs and scrappage schemes (‘‘introduced in many EU countries to kick start sales of new cars in badly depressed new car markets’’. posing a threat to Northgate specifically. Prediction are difficult since the materiality lays with supply and demand (market prices). except contrarian Daimler (‘‘stable with a trend to increase’’) people seem cautions (rather than straight pessimistic). Conclusion . In the annual report the company also states that ‘‘Higher margin retail and semi retail channels accounted for 19% (2011 22%) of disposals. Back to Northgate the Chairman and the CEO feel more of the same as above about 2008/2009 (dreadful) but refer to 2010-2012 as ‘‘Strong used vehicle markets in both UK and Spain’’.uk/wpcontent/uploads/2010/11/pnc-European-Used-Car-Market-Report- . The report may provide more valuable info to investors (http://www. given the covenants and the fact that last time they had to raise equity the risk of decline in used vehicle prices is the most significant for Northgate.So.ac.the risk of decline in used vehicle prices stands but it is rather a ‘‘business as usual’’ risk than something imminent. Source: European-UsedCar-Market-Report-2012). However.buckingham. In the annual reports they publish the number of vehicles sold (and purchased) as well as the prices (there are also the lines in the cash flow statements that state the amounts paid to purchase and dispose of vehicles) so more raw data is available for the investors’ analysis). LIQUIDITY IN USED CAR MARKETS Liquidity (demand) in the used car markets depends on used vehicle finance.
000 cars in UK …… 79.5 million / year a decrease of 6% o The Spanish used car sales were on average: …… 1.which is still liquid enough though.200 cars in Spain THE OTHER FACTORS AFFECTING PRICES AND LIQUIDITY ARE: Obsolescence during 2000-2007 during 2008-2010 during 2000-2007 during 2008-2010 during 2000-2007 during 2008-2010 during 2000-2007 during 2008-2010 . The report includes the below data: o The UK new car sales were on average: …… 2.5 million / year a decrease of 2% The differences between the new / used car markets are obvious (and interesting) but for the purpose of this analysis the notable facts are: .pdf.0 million / year a decrease of 17% o The Spanish new car sales were on average: …… 1.the used car markets are more resilient to recession .0 million / year …… 6.but less liquid in Spain .6 million / year …… 1.4 million / year …… 1.2 million / year …… 2. Northgate has been able to dispose of: …… 118. .2012. During 2008-2012.they are quite liquid in UK. produced by The University of Buckingham Business School).1 million / year a decrease of 23% o The UK used car sales were on average: …… 7. in lower volume markets than the average.
according to the latest report by British Car Auctions. Retained value against Manufacturer Recommended Price was up by a point on September to 32.20%. _______________________________________ Year 2012 2011 2010 2009 2008 Group UK Spain 1. small vans .vrl-financialnews. The October average age of fleet and lease vans at auction was 45.8%. According to Leasing Life: ‘‘ The average used LCV price at auction in the UK hit £4.62 1.6%.79 1.78 1. and sale against CAP Clean was 101.73 1.447 in October.352. Buses. Source: http://www.34%.27 2. average mileage was 72. Fleet age The table below presents the average fleet age as presented by the annual reports. and just shy of the two-year high of £4.13%. cars .4% and that the fleet composition by make in 2012 was Ford -37%. 4x4 and other specialist vehicles . Volkswagen .16%.com/asset-finance/leasing-life/issues/ll-2012/ll-230-nov2012/fleet-friday-jobs.58 _______________________________________ 1.04 1. Northgate’s vehicle mix consists of medium vans .41%.79 2.82 1.8%.4%.201. up 3.52%’’).24 months.84 1. ex-fleet and lease values hit a record high of £5. Other . Mercedes .15%.97 1. up 5. Although values were up in all sectors.33 _______________________________________ I think the company does not run a significant fleet-age risk since on average the vehicles are less than 2 years old (which compares with 3.7% year-on-year.2% month-on-month and 3. large commercial vehicles .3% year-on-year.-money-and.45 1.08 2.I think the company does not run a significant obsolescence risk since it operates a rather diversified portfolio. Vauxhall .aspx .94 1.75 years average age of fleet and lease vans at auction in October 2012.2% month-on-month and 1. Peugeot .483 reached in January this year.
The fleet focusing on light commercial vehicles might provide a slightly higher relative weight (than apparent at the first sight) in manufacturers rankings of buyers of such vehicles.774/vehicle (Value of vehicle purchases as stated in the cash flow statement/no of purchased cars). As a matter of mapping the average purchase price of ₤10.from £16.774/vehicle realized by NTG during the last five years compares to the following retail prices (from the current websites of manufacturers): Ford Transit Connect .500 cars from a few other manufacturers. Northgate is not a ‘‘whale’’ like Leaseplan. Peugeot. VW.from £17.from £12.from £10. GE.Maintenance regime The company claims to have ‘‘improved vehicle maintenance regime’’.from £20. close to 11.from £17.Unless the fleet size falls dramatically. Northgate will not be disrupted by suddenly decreasing discounts but will stay more or .860 VW Transporter .800 Conclusion .2012 Northgate purchased on average 29.960 VW Crafter . DOWNSIZING THE FLEET MIGHT AFFECT DISCOUNTS FROM MANUFACTURERS During 2009 .725 vehicles yearly. etc but it fares better than +400 (smaller) companies in UK while it is (probably) the fourth largest fleet operator in Spain.000 cars from one manufacturer and about 3. Considering the mix (by make) of the fleet described above as a proxy for the purchasing patterns the company buys yearly close to 5.680 Mercedes Sprinter . which appears not to be the case anymore.620 Ford Transit Van .620 VW Caddy .from £20.000 cars from 3 manufacturers (Mercedes. The average purchase price was ₤10.995 Mercedes Vito . Also Northgate’s ’’Van Monster’’ retail sales network (eight locations in UK and five in Spain) might be quite useful for adding to the liquidity of its fleet. about 30% of each years’ fleet.
There is little factual indication yet that rental revenues will grow unless the UK and Spain’s economies grow as well. Odds seem higher for ration to persist (no extravagant ideas like empire building for instance are signaled by current ‘‘leaner but fitter’’ behavior). has prepared for it and we shall see. 2012.Nov-12.Northgate’s product addressed to the retail market (vans for personal use) was. RISK OF IRATIONAL MANAGEMENT .September 2012) and in Spain rates have been decreased by 2%. . THE RISK OF INCREASED COST OF DEBT The current average cost of debt is 7.This management team acted rationally during 2009-2012 and has recent memories of difficult times.less in the same ‘‘discount brackets’’ and faring better than a lot many smaller competitors and worse than the majors. at 31 Oct-12. Jon Tobbell joins as the National Sales and Marketing Director. Still not an enticing environment. . . A REVIEW OF THE GROWTH OPPORTUNITIES Rent Revenues . The rental rates have been increased during 2011. The company is embarked on a deleveraging program (next tranche of £68m to be paid back in Nov 2012) which will contribute to mitigate this risk.May. which is owned by German mail order and catalogue retail giant Otto Group).Re-launched products . New Area Sales Manager northeast have been appointed. He ‘‘hopes to achieve comparable results for Northgate’’. The company believes there are hopes for organic growth. company announces 25% increase in its sales force and promotion of new Head of National Sales.1%.New Supply Chain and Business Development Director. They seem to believe there are hopes for organic growth in UK given a few announcements like: . . June-12. on track to double (to £4.4million) as compared to last year. He apparently achieved 50% revenue increase in his former role at Hermes UK (part of the European group Hermes Logistics Group. If covenants are breached additional costs may occur. But this year UK remained stable (April .
Profit before tax .interest costs are substantial currently. That represented an economy of ₤1.The company seems to be doing the right things (fleet mix. Catalysts: .regular taxes will start to be paid. So PBT could grow by £19. fleet age. A deferred tax asset which amounted to £17.the exceptional administrative expenses such as restructuring costs 2012 .8% interest) in Nov 2012 will lower the interest expense by £5. in 2013.Disposal Revenues .6m (April 2012) vs.£5. maintenance) which is good. Materiality is with supply and demand so except offering proper vehicles there is not much else they can do. .4m if all the above mentioned expenses disappear. and £5. as they are expected to. EBIT might grow.acquisition by a major player during 2013. Paying back £68m of US loan notes (8.dividend payments.2m in 2009 has already been consumed to a large extend. April 2011. . Operating profit (EBIT) .5m in 2011.shall improve assuming that: . 2011 .9m in 2012.debt refinancing at lower interest rates. The net impairment of receivables expensed in COGS was also eating out of EBIT £4.9m for next year.£7m. .6m will disappear. . . Should these phenomena loose significance. too. Net Profit .faster deleveraging.the savings in staff costs resulting from the decrease in the number of personnel will be preserved.
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