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(ifrs-full) Description of nature of entity's operations and principal activities
The description of the nature of the entity's operations and principal activities.
Dimensions
| Date | 1 May 2022 to 30 Apr 2023 |
|---|---|
| Fact Value | Our vision is to be the leading supplier of mobility solutions and automotive services. [...] |
| Accuracy | n/a |
| Change | n/a |
| Entity | [LEI] 213800B3ZUTDOZYVJB41 |
| Concept | ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities |
1 of 1
Validation
No issues
References
IAS
| Name | IAS |
|---|---|
| Number | 1 |
| IssueDate | 2021-01-01 |
| Paragraph | 138 |
| Subparagraph | b |
| URI | http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=1&code=ifrs-tx-2021-en-r&anchor=para_138_b&doctype=Standard |
| URIDate | 2021-03-24 |
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Associated facts
Description of nature of entity's operations and principal activities
1 May 2022 to 30 Apr 2023
Name of reporting entity or other means of identification
1 May 2022 to 30 Apr 2023
Legal form of entity
1 May 2022 to 30 Apr 2023
Country of incorporation
1 May 2022 to 30 Apr 2023
Address of entity's registered office
1 May 2022 to 30 Apr 2023
Revenue: hire of vehicles
1 May 2022 to 30 Apr 2023
Revenue: hire of vehicles
1 May 2021 to 30 Apr 2022
Revenue from sale of goods
1 May 2022 to 30 Apr 2023
Revenue from sale of goods
1 May 2021 to 30 Apr 2022
Revenue: claims and services
1 May 2022 to 30 Apr 2023
Revenue: claims and services
1 May 2021 to 30 Apr 2022
Revenue
1 May 2022 to 30 Apr 2023
Revenue
1 May 2021 to 30 Apr 2022
Cost of sales
1 May 2022 to 30 Apr 2023
Cost of sales
1 May 2021 to 30 Apr 2022
Gross profit
1 May 2022 to 30 Apr 2023
Gross profit
1 May 2021 to 30 Apr 2022
Administrative expenses (excluding exceptional items)
1 May 2022 to 30 Apr 2023
Administrative expenses (excluding exceptional items)
1 May 2021 to 30 Apr 2022
Impairment loss (reversal of impairment loss) recognised in profit or loss, trade receivables
1 May 2022 to 30 Apr 2023
Impairment loss (reversal of impairment loss) recognised in profit or loss, trade receivables
1 May 2021 to 30 Apr 2022
Exceptional administrative expenses: impairment of goodwill
1 May 2022 to 30 Apr 2023
Exceptional administrative expenses: impairment of goodwill
1 May 2021 to 30 Apr 2022
Exceptional administrative expenses: impairment of other intangibles
1 May 2022 to 30 Apr 2023
Exceptional administrative expenses: impairment of other intangibles
1 May 2021 to 30 Apr 2022
Reversal of impairment loss recognised in profit or loss, property, plant and equipment
1 May 2022 to 30 Apr 2023
Reversal of impairment loss recognised in profit or loss, property, plant and equipment
1 May 2021 to 30 Apr 2022
Exceptional administrative expenses: other costs
1 May 2022 to 30 Apr 2023
Exceptional administrative expenses: other costs
1 May 2021 to 30 Apr 2022
Administrative expenses
1 May 2022 to 30 Apr 2023
Administrative expenses
1 May 2021 to 30 Apr 2022
Profit (loss) from operating activities
1 May 2022 to 30 Apr 2023
Profit (loss) from operating activities
1 May 2021 to 30 Apr 2022
Share of profit (loss) of associates accounted for using equity method
1 May 2022 to 30 Apr 2023
Share of profit (loss) of associates accounted for using equity method
1 May 2021 to 30 Apr 2022
Gain recognised in bargain purchase transaction
1 May 2022 to 30 Apr 2023
Gain recognised in bargain purchase transaction
1 May 2021 to 30 Apr 2022
EBIT
1 May 2022 to 30 Apr 2023
EBIT
1 May 2021 to 30 Apr 2022
Finance income
1 May 2022 to 30 Apr 2023
Finance income
1 May 2021 to 30 Apr 2022
Finance costs
1 May 2022 to 30 Apr 2023
Finance costs
1 May 2021 to 30 Apr 2022
Profit (loss) before tax
1 May 2022 to 30 Apr 2023
Profit (loss) before tax
1 May 2021 to 30 Apr 2022
Tax expense (income)
1 May 2022 to 30 Apr 2023
Tax expense (income)
1 May 2021 to 30 Apr 2022
Profit (loss)
1 May 2022 to 30 Apr 2023
Profit (loss)
1 May 2021 to 30 Apr 2022
Basic earnings (loss) per share
1 May 2022 to 30 Apr 2023
Basic earnings (loss) per share
1 May 2021 to 30 Apr 2022
Diluted earnings (loss) per share
1 May 2022 to 30 Apr 2023
Diluted earnings (loss) per share
1 May 2021 to 30 Apr 2022
Profit (loss), attributable to owners of parent
1 May 2022 to 30 Apr 2023
Profit (loss), attributable to owners of parent
1 May 2021 to 30 Apr 2022
Foreign exchange differences on retranslation of net assets of subsidiary undertakings
1 May 2022 to 30 Apr 2023
Foreign exchange differences on retranslation of net assets of subsidiary undertakings
1 May 2021 to 30 Apr 2022
Net foreign exchange differences on long term borrowings held as hedges
1 May 2022 to 30 Apr 2023
Net foreign exchange differences on long term borrowings held as hedges
1 May 2021 to 30 Apr 2022
Foreign exchange difference on revaluation reserve
1 May 2022 to 30 Apr 2023
Foreign exchange difference on revaluation reserve
1 May 2021 to 30 Apr 2022
Other comprehensive income
1 May 2022 to 30 Apr 2023
Other comprehensive income
1 May 2021 to 30 Apr 2022
Comprehensive income
1 May 2022 to 30 Apr 2023
Comprehensive income
1 May 2021 to 30 Apr 2022
Goodwill
30 Apr 2023
Goodwill
30 Apr 2022
Intangible assets other than goodwill
30 Apr 2023
Intangible assets other than goodwill
30 Apr 2022
Property, plant and equipment
30 Apr 2023
Property, plant and equipment
30 Apr 2022
Deferred tax assets
30 Apr 2023
Deferred tax assets
30 Apr 2022
Investments in associates accounted for using equity method
30 Apr 2023
Investments in associates accounted for using equity method
30 Apr 2022
Non-current assets
30 Apr 2023
Non-current assets
30 Apr 2022
Current inventories
30 Apr 2023
Current inventories
30 Apr 2022
Trade and other current receivables
30 Apr 2023
Trade and other current receivables
30 Apr 2022
Current tax assets
30 Apr 2023
Current tax assets
30 Apr 2022
Cash
30 Apr 2023
Cash
30 Apr 2022
Current assets
30 Apr 2023
Current assets
30 Apr 2022
Assets
30 Apr 2023
Assets
30 Apr 2022
Trade and other current payables
30 Apr 2023
Trade and other current payables
30 Apr 2022
Current provisions
30 Apr 2023
Current provisions
30 Apr 2022
Current tax liabilities
30 Apr 2023
Current tax liabilities
30 Apr 2022
Current lease liabilities
30 Apr 2023
Current lease liabilities
30 Apr 2022
Current borrowings
30 Apr 2023
Current borrowings
30 Apr 2022
Current liabilities
30 Apr 2023
Show more results
Validation results
| Severity | Code | Message |
|---|
+
-
+
-
Redde Northgate plc Annual Report and Accounts 2023
Keeping
customers
mobile
Redde Northgate plc
Annual Report and Accounts 2023
4
Strategic report
Highlights of the year 1
About us 2
Our business model 8
Our markets 12
Our strategy 17
CEO Q&A 20
Chairman’s statement 22
CEO review 24
Key performance indicators 28
Financial review 30
GAAP reconciliation 38
Identifying and managing risk 40
Principal risks and uncertainties 44
Viability statement 50
Sustainability 52
TCFD report 64
Non-financial information statement 71
Section 172 statement 72
Corporate governance
Chairman’s introduction to governance 77
Governance at a glance 80
Governance structure and responsibilities 81
Board of Directors 84
Corporate governance 86
Report of the Nominations Committee 90
Report of the Audit Committee 93
Introduction to Remuneration report 98
Directors Remuneration Report 102
Report of the Directors 125
Statement of Directors’ responsibilities
in respect of the financial statements 129
Independent auditors’ report to the
members of Redde Northgate plc 130
Financial statements
Consolidated income statement 139
Consolidated statement of
comprehensive income 140
Consolidated balance sheet 141
Consolidated cash flow statement 143
Notes to the consolidated cash flow
statement 144
Consolidated statement of
changes in equity 145
Notes to the consolidated
financial statements 146
Company balance sheet 195
Company statement of changes in equity 196
Notes to the Company financial statements 197
Shareholder and other information
Glossary 207
Shareholder information 210
Introduction
Leading the way
with integrated
mobility solutions
Our purpose:
Keeping customers mobile
Delivering their regular needs or supporting them
when unforeseen events occur. We do this responsibly,
underpinned by our culture.
Our vision:
Be the leading supplier of mobility
solutions and automotive services
Trusted to provide expert advice and manage complex
solutions. An enabler of our customers’ transition to
lower-carbon mobility.
Non-GAAP Statement
Throughout this report, we refer to underlying results and measures. The underlying measures allow management and other
stakeholders to better compare the performance of the Group between the current and prior year without the effects of
one-off or non-operational items.
Underlying measures exclude intangible amortisation from acquisitions, certain adjustments to depreciation and certain
one-off items such as those arising from restructuring activities and the tax impact thereon. Specifically, we refer to disposal
profit(s). This is a non-GAAP measure used to describe the adjustment in depreciation charge made in the year for vehicles
sold at an amount different to their net book value at the date of sale (net of attributable selling costs).
A reconciliation of GAAP (reported) to non-GAAP (underlying) measures is included on pages 38 to 39. A further explanation
of alternative performance measures and a glossary of terms used in this report can be found on pages 207 to 209.
1
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
Highlights of the year
Operational Highlights
Financial Highlights
Fleet size (’000)
130.7
+3.4%
Underlying profit before tax £m
£165.9m
+9.7%
Revenue £m
£1,489.7m
+19.8%
Utilisation
92%
-ppt
Pursuing market
opportunities
Delivering
with purpose
Growing
responsibly
Underlying EPS (p)
55.6p
+9.5%
ROCE %
14.1%
+0.2ppt
Read more on
Our markets – page 12
Read more on
CEO review – page 24
Read more on
Sustainability – page 52
We operate in markets where operators are
increasingly looking to outsource their mobility
needs to trusted and experienced suppliers.
A customer-centred focus
on responsive delivery and
transparent performance.
Taking into account the impact
on our people, the communities
in which we work and the planet
on which we all live.
2
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
About us
Our customers and people
are at the heart of what we do
Keeping our
customers mobile…
Business model
We are focused on placing the customer at the
centre of our business, offering a broad range of
services that can be flexed and tailored to the
needs of each customer.
Read more on Our customers – page 6
…underpinned
by our culture…
People
We seek to empower our colleagues,
embedding the right values and skills to
deliver industry-leading customer service.
Read more on
Supporting our people – page 19
…delivering for our stakeholders
Strategy
Our strategy centres on leveraging the benefits of
ownership of a range of complementary businesses,
which together deliver integrated mobility solutions
across the vehicle lifecycle.
Read more on Our Strategy – page 17
Remuneration
We reward our colleagues and business leaders
against a range of relevant financial metrics,
and where appropriate also against a number
of personal and strategic objectives.
Read more in the
Remuneration report – pages 98 to 124
Stakeholders
We look to create sustainable value, investing in the
business for the benefit of our diverse stakeholder groups
and our social environment.
Read more on Our stakeholders – page 9
See more online
www.reddenorthgate.com/about-us/
our-purpose-and-values/
3
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
About us continued
Supporting our customers
We often have multiple
touch points with a
customer through the
lifecycle of their vehicle
provided by the different
businesses in the Group.
Vehicle
sales
Specialist
vehicle
recovery
Refrigerated
vehicle
provision
Specialist
traffic
management
Legal
services
Vehicle
repairs
Accident
management
Insurance
mobility
Service and
maintenance
EV
transition
Fleet
management
and services
Vehicle
provision
See more online
www.reddenorthgate.com/about-us/
4
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
Vehicle disposal
Extensive range of used
vans & cars offered to
businesses and private
individuals through retail
sites in UK, Spain & Ireland
and online auction
platforms, with
comprehensive aftersales
support.
Principal disposal route
for the Group’s fleet and
also used by Northgate
rental vehicles, also used
by fleet operators for
fleet disposals.
Bodyshop repair
Vehicle damage repairs,
for cars and LCVs including
structural, aluminium and
body repairs.
Comprehensive
automotive repairs from
owned and third party
centres across the UK
together with mobile
repair, glass repair and
replacement services.
About us continued
What we do
The Group provides integrated mobility solutions to businesses and consumers.
We have grown both organically and through acquisition to become a market
leading provider of a diverse range of related services which customers
increasingly choose to take as an integrated mobility solution.
Vehicle
provision
Vehicle rental, service
and maintenance across
the UK, Spain and Ireland
to a range of blue chip,
governmental and
corporate fleets.
Very broad fleet options
including small to large
panel vans, customised
vans, e-LCVs and specialist
vehicles including
refrigerated, traffic
management & support.
Claims support
and accident
management
End to end handling of
any accident claim on
a UK customer fleet or
policyholder’s behalf from
initial incident reporting
to repair and insurer
management.
Legal support services for
vehicles, drivers and/or
passengers involved in a
motor incident such as
personal injury claims or
uninsured loss recovery.
Fleet support
Management of the
performance, compliance
and maintenance of
commercial fleets such as
service scheduling,
telematics, driver liaison,
training and downtime
management.
Additional fleet support
services together with
EV charging and solar
installation and EV fleet
suitability consulting.
Replacement
vehicle
Replacement vehicle
provision following an
accident, either through
credit hire arrangements
or direct hire for insurer’s
own policyholders.
Like-for-like replacement
vehicles in event of a
non-fault accident, or
where customer has
subscribed to upgraded
courtesy car policy.
Find out more on our website by scanning
the QR code
5
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
Integrated mobility solutions
About us continued
What we provide
At the heart of our integrated
platform is the broad range
of support services which
customers can choose from
in any combination.
From fleet management,
servicing and EV charging
points, to specialist roadside
recovery, vehicle repairs and
personal claims, we can provide
an end to end mobility solution.
These services are delivered
through our network of 175 sites
and more than 7,000 colleagues.
Our customers
Our customers comprise
a broad range of fleet
operators, corporate partners
and insurance companies and
brokers, who outsource many
of their mobility services to us.
We engage directly, both
with them and also with their
drivers and policyholders when
they need support, whether
with vehicle rental or accident
management support,
wherever they are located.
Integrated platform
While the services are accessible
on a standalone basis, they
function seamlessly as a
combination. Allowing greater
efficiencies and benefitting from
the breadth and scale of our
network, minimising operational
friction, increasing flexibility and
responsiveness for customers.
How we support
We provide digital support
from the platform through Fleet
driver apps, Fleet management
systems, partner CRM systems,
and claims service solutions all
helping our customers access
the information and support
they need, wherever they are.
From 24/7 call centres, to fleet
and partner account managers
and branch rental teams, we
ensure customers can talk
directly to us whenever they
need to.
…
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6
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
About us continued
Our
customers
We keep our customers mobile
through meeting their regular
mobility needs or by servicing
and supporting them when
unforeseen events occur.
We are trusted by customers across many sectors
and industries, building long term, growing
relationships through being trusted for customer
excellence and efficiency.
We partner with a broad range of leading motor
insurers, fleet operators and leasing companies, as
well as a diverse customer base from government
agencies and blue-chip companies to SMEs.
Corporates from
blue-chip to SMEs
• Renting vehicles to corporate customers from
the largest of blue chips through to SMEs
• A broad cross section of industries from
support services to infrastructure, construction
and logistics
• Fleet management services to corporate
fleets ranging from below 25 vehicles to
over 1,000
• Incident management to corporate and
dealership fleets
Insurance and leasing
• Working with many of the UK’s leading
insurers and insurance brokers
• Supporting fleets of many of the largest
contract hire and leasing companies
in the UK
• Extensive product range from incident
management to claims and repair handling
• Providing complete management of an
accident and claim across both credit
and direct hire and repair
Public
Sector
• We are an accredited Public Sector provider
through a number of Framework Agreements
• Providing rental vehicles to many government
agencies, NGOs and local councils
• Specialist ‘blue light’ recovery services to
12 emergency services in the UK
• Support to National Highways on major
incident management
Consumers
• Although principally a B2B provider, we have
a number of services and engagement with
individual drivers and through retail as well
as business channels
• Supporting accident claims handling for
individual referrals from our insurance partners
• Disposing of vehicles to retail buyers through
retail sites and online auctions
• In Spain, renting vehicles and providing
workshop services to retail
• Installation and support for EV charging
infrastructure across the UK to retail consumers
7
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
Cars
LCVs
Diesel
EV & cars
Petrol
Cars
LCVs
Diesel
EV & cars
Petrol
About us continued
Ensuring
customer
proximity
We support our customers through a network and
diversified fleet of 130,700 owned and leased vehicles
from 175 branches across the UK, Ireland and Spain,
and with a specialist team of 7,400 colleagues.
This operational scale and reach provides significant
benefits and greater responsiveness for our customers
across a broad range of services. This is delivered through
a unique integrated platform and solutions for customers
increasingly outsourcing their vehicle management needs.
Spain
26
Rental locations
39
Repair centres
1,300
Colleagues
We provide vehicles from a very broad range of
automotive manufacturers to give our customers
the greatest choice, with a growing number of
EV and hybrid models.
Group Fleet
Vehicle hire
(UK&I) 50,800
Vehicle hire
(Spain) 61,40 0
Insurance
Mobility Services
(UK) 18,500
Total 130,700
Vehicle fuel types
UK & Ireland
91
Rental locations
64
Repair centres
6,10 0
Colleagues
Rental locations
117
Repair centres
103
Colleagues
7, 4 0 0
8
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
Our business model
The value
we create
Our market leading proposition is focused on placing the customer
at the centre of our business, offering a broad range of services
that can be flexed and tailored to the needs of each customer.
Integrated platform
A market leading end to end platform of wholly-
owned services, providing seamless customer service.
Nationwide networks
The scale of our branch and repair networks allows
us to respond to customer needs in the most effective
and responsive way possible.
Our people
Highly-skilled and experienced with strong technical
capabilities and an in-depth understanding of
customer challenges.
Market positioning
Widely recognised as market leader, our strong track
record and breadth of expertise positions us as a
trusted adviser and partner to many leading brands.
Financial strength
Our strong balance sheet and financial capability
enables us to quickly respond to market opportunities.
Integrated mobility solutions
Our integrated mobility platform allows many
of our customers to benefit from taking multiple
services together, simplifying their procurement
and operational processes, and achieving greater
cost efficiencies.
Drive to Zero
We also support our customers in the transition
to zero emissions transport by providing solutions,
driver training and advice to help customers
make the switch.
Generating revenue
We generate revenues from rental and value-
added services for vehicle fleet customers,
together with accident management, repair
and claims handling revenues. Revenues from
the disposal of vehicles at end of rental life help
fund fleet replacement.
Customers
Miles driven by
customers in year
2.1bn
Partners & suppliers
Capital
expenditure
£476m
Investors
Dividends
£52.2m
Governments & regulators
Income taxes paid
£36.6m
Employees
Salaries & benefits
£271m
Community
EV chargers installed
6,700
…and create value responsibly
for all stakeholders…
…deliver benefits…
Our key resources…
Our competitive strengths:
UNRIVALLED CUSTOMER
EXPERIENCE
SCALE EXPERTISE
9
Redde Northgate plc
Annual Report and Accounts 2023
Strategic
report
Corporate
governance
Financial
statements
Shareholder and
other information
Redde Northgate plc
Annual Report and Accounts 2023
Our business model continued
People
With 7,400 people across
three countries and 175
locations, our colleagues
are central to our business
performance and our
ability to provide customer
service. We are focused
on attracting and retaining
talent in competitive
markets and ensuring
colleagues fulfil their
potential.
How we engaged
We promote a transparent,
two way communication
approach with our
colleagues, through
townhalls and the new HUB
internal comms platform.
We also engage in formal
communications through
an Employee Engagement
Forum and annual survey.
We are continually looking
to develop our team
members with appropriate
development opportunities.
Read more on page 19
Customers are central
to our business; from sole
traders, large multi-national
fleet owners or insurance
partners, we strive to
provide the highest levels
of customer service and
a flexible range of mobility
solutions to keep them
mobile and focused on
what is important to them.
How we engaged
We seek to build long term
customer relationships
and regularly engage
to help identify changing
needs and requirements.
With recent shortages
of vehicles and parts,
we have sought to be
transparent with customers
as to the challenges faced
in meeting their needs.
Read more on page 18
We seek to build mutually
beneficial relationships
with all our key supply
chain partners, enabling
us to focus on every step
in our supply chain and
to operate efficiently.
We have a responsible
supplier policy and commit
to work in a transparent
and consistent way.
How we engaged
We have engaged on
a regular basis, including
annual meetings to review
our performance and
improvement plans. Key
suppliers have designated
account managers and
dialogue increasingly
includes reviews of
sustainable alternatives for
products and adherence
to our policies.
Read more on page 72
We look to engage
with governments and
regulators to maintain a
constructive dialogue and
ensure we understand an
ever-changing landscape
for mobility. Policies relating
to the EV transition is a
key focus, together with
operational safety
compliance aspects and
personal data handling.
How we engaged
On policy matters we
engage principally through
our active participation
with industry bodies
including BVRLA and
AEDIVE.
Read more on page 10
We engage with the
local communities in each
major location we have a
presence, including local
schools, business groups
and community
organisations. We seek
to have a positive impact
on the places in which
we operate, and on the
environment where we
are located.
How we engaged
We seek out and engage
directly with community
group leaders and
enterprises to determine
how we can best support
social and environmental
projects. This includes
the loan of vehicles,
volunteering and
fundraising activities.
Read more on page 58
We are committed to
promoting investor
confidence and
understanding, to enable
both equity investors and
lenders to make informed
decisions. To achieve this
we seek regular dialogue
with market participants to
communicate our strategy
and business objectives.
How we engaged
Our Executive Directors met
with over 80% of our major
active shareholders in
FY2023, and the Chairman
of our Remuneration
Committee held 14
governance meetings with
shareholders and proxy
agencies. This was
supported by the launch of
a new corporate website.
We also maintain regular
dialogue with lending
institutions.
Read more on page 86
Suppliers Communities
Customers & partners Regulators
Our
stakeholders
We regularly engage with our stakeholders across a variety of formats,
including face to face meetings, surveys and multimedia channels.
Through this dialogue we can better inform our strategy, enhance
our customer service and deliver sustainable growth.
…who we engaged with throughout the year
Investors
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Drive to Zero:
reducing
customer
emissions
Across our geographies, we are working
to help enable the energy transition for
customers and their commercial vehicle fleets.
We are recognised as a trusted adviser to
customers embarking on their drive towards
net zero.
With our end to end support and
in-house expertise and capabilities, we are
differentiated in our market position; aiding
fleet customers to develop and deliver
plans to reduce their carbon emissions,
and supporting those starting to use EVs
with their charging infrastructure.
As a market leader with longstanding
experience across all aspects of owning
and managing vehicle fleets of all sizes,
we also know we have a voice and a role to
play in ensuring policy makers, our industry
and customers find the most efficient and
effective mobility solutions.
Through our Board-level representation on
UK and Spanish industry bodies, BVRLA and
AEDIVE, we are engaging with Government
departments, providing insight into the most
effective methods to drive decarbonisation,
through focus areas, legislation and
taxation mechanisms.
Case study
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EV suitability consulting
We support customers in analysing their
journeys and suitability to transition over to
EVs. Using telematics we have analysed over
2,000 vehicles across UK customers, assessing
range, payload and charging opportunities.
EV open days
We host days where customers can
experience current and future fleet EVs,
and understand our Drive to Zero services.
With four days already held in the UK and
Spain, there is a rolling programme of
events planned.
Driver training
We continue to offer free driver training
at the point of a vehicle being delivered.
So far over 550 free training courses have
been provided to our customers.
Service & support
All of our workshops have team
members trained and able to support
in the servicing and maintenance of
electric vehicles.
Growing fleet choice
We continue to expand our range of
available EVs and hybrids in line with
market expectations. We now have 12 UK
and 16 Spanish models available and over
4,700 vehicles on fleet, including small and
medium sized vans and specialist transport
management and refrigerated vehicles.
New technologies
There are many exciting innovations
within the automotive sector, from EV
battery technology to rethinking urban
and micro mobility solutions. We ensure
we are up to date with new technologies
and OEMs, identifying opportunities with
Iberdrola which offers rental, charging and
green energy solutions, and in the UK to
broaden our customer offering.
Charging and operational support
With an industry-first vehicle and charging
rental bundle, we continue to seek ways to
remove barriers for customers in their
transition journeys. With a UK-wide charging
installation capability, we support installation
of both home and workplace infrastructures.
Green energy and solar options
We are developing new complementary
products and services to support the
adoption of EVs within a fleet. In Spain,
a partnership with Iberdrola will offer
green energy contracts, and in the UK
we are starting to offer solar panels
integrated into the EV charging solution.
Supporting customers
Product enablers
Case study continued
4,700
EVs and hybrids on fleet
6,700
EV chargers installed
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Overview
Introduction
Redde Northgate operates across a
number of disparate but connected
markets where customers have a variety
of routes to access both passenger and
commercial vehicles, and to accident &
incident management services, including
claims and repair, but very few players
can provide an integrated service for
most or all of their needs.
Within these diverse markets, Redde
Northgate has developed a market-
leading reputation as a large, integrated
specialist operator focused on the LCV
fleet rental segment across the UK and
Ireland and Spain, together with provision
of accident claims, hire and repair
services of all vehicle types to large
corporate and insurance partners in
the UK.
Redde Northgate’s owned end to end
mobility services offering is a key asset
in this context. This includes a substantial
vehicle fleet totalling over 130,000
vehicles, over 1,200 call centre claims
handlers, 350 legal advisers and one of
the largest combined branch network
and repair capabilities across its
geographies.
LCV
There are many businesses in the UK and
Europe offering such leasing and rental
services, from single-location through to
large multinational operators, where LCV
supply is part of a larger offering of a broad
range of vehicle types.
UK & Ireland and Spanish fleet customers
have traditionally chosen to own their
vehicles directly, but have increasingly taken
out multi-year long term lease contracts or
rented products for portions of their fleet.
Rental offers greater flexibility in managing
fleet size and lower capital expenditure
compared to ownership; this is combined
with the benefits that Redde Northgate can
offer customers in terms of additional fleet
services, efficiencies, and vehicle supply
and choice.
Accident management and repair
The UK market is highly competitive, with
a broad range of participants ranging from
smaller single garage service centres and
body shops, through to large independent
national chains, as well as in-house
operations within large insurance companies.
Increasingly, these in-house operations
have been viewed as non-core by insurers
and major fleet providers, increasingly
aligned with the outsourced model used
by insurance brokers and smaller operators.
There has therefore been a growing trend
to outsource such requirements to networks
of independent repair centres or to regional
or nationwide bodyshop group operators,
such as Redde Northgate.
We differentiate ourselves from our peers in
the breadth and quality of services we offer
from our platform, however there are large
competitors within the different elements
of accident and claims management and
repair. In Spain, the legal framework does
not support credit hire and repair services,
and repair centres tend to be more
local operations.
Our markets
Market opportunity
Our customer base is growing as the Group
increases its share in the segments it operates
in; from acquisitions and also as a result of
underlying market growth as outsourcing
continues to grow. Clients are attracted to
the multiple services they can access from
Redde Northgate’s integrated platform, the
simplicity this brings to complex processes,
and our specialist technical expertise.
Our platform provides our customers
both with greater flexibility and cost benefits
derived from the greater efficiencies and
national presence that our platform affords;
and our clients can minimise operational
friction and benefit from greater
responsiveness by choosing to take multiple
services from us.
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Vehicle supply
Redde Northgate has relationships with over
40 automotive OEMs and historically has
been one of the largest single purchasers
of LCVs in the UK and Europe, outside of the
traditional OEM dealership networks.
This strong supply-side relationship network
means that the business typically has early
access to new vehicle supply at scale.
This is because our financial strength,
responsiveness and ability to showcase
brands and new models is attractive to
manufacturers looking to place multiple
vehicles as we continually seek to refresh and
expand our fleet of over 130,000 vehicles.
COVID-19 and the regional conflicts have
combined to create tight supply conditions
for LCVs and new vehicles in general over
the past three years, with manufacturing
processes and supply chains significantly
dislocated for both new units and parts.
While the left-hand drive markets, including
Spain, have recovered much of their new
vehicle supply chain liquidity, particularly for
new cars, the right-hand drive market of UK &
Ireland remains substantially under-supplied.
This has continued to have consequences
for both the new vehicle market and also for
used vehicle pricing, which has remained at
significantly higher levels than pre-COVID-19.
Continued lack of visibility around the
supply chain easing, and the cumulative
under-supply estimated at c.250,000 LCVs
(in the years following COVID-19) in the UK
and Ireland, means the supply-demand
imbalance is expected to continue for a
number of years before normalising, with
a slow return to “normal” markets. In Spain
however, improved vehicle supply is allowing
the market to revert to closer to historic
norms, although used vehicle prices
remain above pre-COVID-19 levels.
Global vehicle supply chains and
production capabilities have started to
recover, together with some interesting
new market entrants. With improved
availability we will be able to accelerate
vehicle onboarding allied to responsible
remarketing of used vehicles.”
Tim Bailey,
UK Fleet Director
EV & new technologies
The growing market for non-ICE vehicles,
principally EVs, has also been impacted by
supply chain constraints. For the emerging
e-LCV segment, there is the additional
challenge of limited range and payload
capabilities of the current generation of
battery technology and the supporting
infrastructure.
This currently limits e-LCV real-world usability
within a commercial fleet, together with
the challenges of overnight charging away
from a depot and in-journey and destination
charging. With limited options for e-LCVs,
customers are more focused on
understanding their options for starting to
adopt EVs, rather than significant scaling up
within their fleets at this time.
Next-generation technology, in particular
from newer market participants, does
however offer greater range and flexibility
potential for fleet users, and e-LCV adoption
is expected to grow significantly in the
coming years as these come to market.
We are working to develop relationships with
a broad range of current and new OEMs who
are embracing new technology to support
the energy transition for LCV fleets.
Our markets continued
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LCV rental
UK and Ireland
With total LCVs on the road in the UK &
Ireland estimated at 4.6 million, with an
average age of over eight years. The
outsourced (leasing/rental) segment of
c.800,000 vehicles makes up a modest
but growing percentage of the total
vehicle fleet. Demand within this market
for LCV rental is driven by economic growth,
together with the structural shift to
outsourcing non-core operations including
fleet management away from ownership.
Redde Northgate has diverse end-sector
exposure, with no sector representing more
than 15% of the fleet and no customer more
Demand continues to
be very strong; improved
vehicle supply will allow
both a refresh of the
existing fleet and offer
opportunities to grow
new business.”
Neil McCrossan,
Northgate UK Sales Director
Spain
The total number of LCVs is estimated at
nearly 5 million, and the LCV rental segment
totals c. 850k. Of this, around 30% are cars
or car-derived vans, a significantly higher
proportion than in UK and Ireland, with an
older average age of nearly 14 years.
Demand is impacted by similar economic
growth factors as in the UK, but additionally
by the strong tourist market, which is
reflected in strong seasonal activity.
GDP growth has been supported by public
investment and remains above the EU
average, helping demand in infrastructure-
related sectors such as construction, IT and
telecoms. Our customers come from diverse
sectors, with construction and support
services segments such as infrastructure,
safety and maintenance being significant.
There are growing market opportunities
for EV solutions, including the provision of
access to workshop capacity for corporate/
insurance customers who have large fleets
and need greater certainty of access. There
are more significant market operators than
Northgate, principally focused on leasing,
but few offer the level of rental flexibility
and regional services network that
Northgate Spain can provide.
Together with growing
our workshop capacity,
the progressive easing of
vehicle supply throughout
the year has been key to
accelerating growth and
enhancing our customer
proposition.”
Jorge Alarcon Alejandre,
Managing Director
Northgate Spain
Our markets continued
than 3%. Over 40% of our fleet is placed with
clients working in the public sector, and less
than 15% is with SMEs who rent fewer than
five LCVs.
At present we are seeing strong demand
from across the customer base, significantly
exceeding the current supply of LCVs, giving
us confidence in the longer term growth
outlook for the Group.
A growing number of customers are also
attracted by the range of ancillary services
offered by Redde Northgate such as
telematics, fleet management and support
services, as well as a range of specialist
vehicles such as traffic management
and refrigerated vehicles.
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Accident management, claims and repair
In the UK, there are estimated to be 40 million
motor policyholders and around 2.6 million
road traffic accidents annually, resulting in
two million insurance-related vehicle repairs
being undertaken. Each form of claim results
in different and complex legal processes for
the management of a claim, but will typically
involve incident recovery, replacement
vehicle loan and bodyshop or mobile repair.
The overall repair bodyshop market in the
UK is estimated to comprise of some 3,400
bodyshop locations, with no single operator
owning more than 100 locations. There are
also networks of independent body shops
which contract capacity together.
Our insurance partners are estimated to
represent 17-20m policyholders, and typically
contract with a number of providers to
secure their hire/repair capacity needs, or
as referral partners. Redde Northgate owns
67 bodyshop locations and has a third party
network of over 400 body shops. This places
us in the top three providers of repair
capacity in the UK, carrying out around
190,000 repairs a year.
The UK market for outsourced services
has been growing as more insurance and
corporate partners look to reduce their
non-core operations. Depending on the
business model of the customer, this can be
for supporting their direct business for their
own policyholders, or as referral partners for
credit-based non-fault claims management.
There is also a growing trend of consolidation
of outsourced partners and a focus on larger
operators such as Redde Northgate who can
manage the complexity of claims and repair
processes and provide the highest levels of
customer service.
The trend to increased outsourcing of
accident and incident management and
repair services by insurance companies,
brokers and other corporate partners is
expected to continue; this creates numerous
opportunities, both in the form of individual
services together with a growing number of
combined service opportunities across claims
handling, replacement hire and repair.
Our markets continued
The continuing trend for outsourcing
combined with scarce supply of
bodyshop capacity puts us in an
attractive position as a trusted partner,
able to provide cost efficient solutions
for our partners.”
Harvey Stead,
Managing Director Redde
2m
insurance repairs
annually
17-20m
policyholders
represented by our
insurance partners
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Case study
Equine Rescue
Service
These include working with over
12 emergency services specialising
in recovery and major incident
management, recovery within
complex operations such as
Operation Stack (managing traffic
flow to the Channel Tunnel and
the Port of Dover) and the 2012
Olympics, and oversized loads
and equine rescue.
We have worked in exclusive
partnership with Equine Rescue
Service for over 13 years, providing
a specialist bespoke roadside
mechanical breakdown and
recovery service to support over
20,000 of their members travelling
with horses – from equestrian
Olympic medallists to first-time riders.
When an incident or breakdown is
reported to us, our specialist 24/7
roadside support team ensures the
safety and wellbeing of the horse,
We provide specialist support in a broad
range of situations where such expertise
is essential to resolving a breakdown or
supporting an accident.
Through our long-standing partnership with FMG
we can ensure that expert help is quickly at hand
and our members are back on the road in the
fastest possible time.
We receive lots of positive feedback from our
members on the great service they’ve received
at a very stressful time.”
Debbie MacMorran,
Managing Director, Equine Rescue Service
driver and any passengers until
they reach their destination. When
a roadside fix isn’t possible, we
arrange for the specialist onward
transportation of the horse, take
the driver and passengers to their
destinations and the vehicle is
recovered to the driver’s home,
or preferred repairer.
By integrating our operating
platforms, we exchange real-time
data, ensuring the shortest allocation
and response times for members
waiting at the roadside.
Member satisfaction
• 88% of calls are answered
within 20 seconds
• 80% of the time we fix the
vehicle at the roadside
• 91% of members said they were
very satisfied or satisfied
• 93% said they would recommend
the service to others
93%
would recommend
Equine Rescue Service
to others
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Our strategy
Since the merger in 2020, our strategy has focused on leveraging the benefits of ownership
of a range of complementary businesses, which together deliver integrated mobility solutions
across the vehicle lifecycle.
This strategy has served us well in developing a platform through which customers can
seamlessly access a broad range of services, and helps achieve a group-wide culture,
efficiencies and growth across our businesses.
Our
strategy
Our people are
a vital part of the
process; it is their
skill that gives us
our capability.”
Operations Director,
FMG RS
Providing workshop
capacity to Spanish
insurance and fleet
customers is a
new and exciting
opportunity for us.”
Operations
Development Manager,
Northgate Talleres
Joining the
Group has quickly
expanded both
my sales pipeline
and opportunities
with our existing
customers.”
Sales Manager,
Blakedale
Focus Drive Broaden
Completing the integration of the Group,
accessing cost synergies and developing
the widened customer proposition.
• An industry-leading, integrated business
• An efficient, dynamic Group
• A culture where people can be their best
Diversifying our current offering into
complementary markets and exploring
growth in further markets and geographies.
• Leverage the scale of the Group
• Products and services that exceed expectations
• A sustainable and responsible business
Developing our offering further
into new markets and geographic
growth opportunities.
• Explore opportunities in new markets
and new geographies
• Expand into complementary markets
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Our strategy continued
Enhancing
customer service
Digital
enablement
Enhancing the digital
provision of data,
with improved
processing efficiency
and transparency;
offering greater
commercial insights
to customers with
increasingly cross-
platform reporting.
Organic
platform growth
Expanding our
capabilities and
network reach, through
new branch openings
and improved customer
offerings, including
bundled EV and solar
charging solutions,
open workshops and
B2C product offerings.
EV consulting
Broadening our
advisory and consulting
support to customers
embarking on their
transport-related
energy transition
journeys.
M&A
Pipeline of M&A
delivering a broader
product set, new
geographies and
customer solutions;
including both
complementary
(FridgeXpress, May
2023) and more
transformational
opportunities.
Sourcing new
technologies
Identifying innovation
in vehicle and accident
product solutions;
including new supply
chain routes, delivering
greater customer
choice and access to
new technologies and
lower-carbon solutions.
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Our strategy continued
Supporting
our people
Connecting,
listening and
learning
Prioritising employee
engagement to lead
to better retention
rates and increased
productivity; over
5,700 of our people
completed an
engagement survey
delivering a 74% overall
satisfaction rating.
Reinforcing a
shared culture
Encouraging a
stronger sense of
unity across the Group;
through the alignment
of Group-wide values
and simplified grade
structures, together
with a package of
enhanced benefits
and share awards.
Helping our people
in challenging times
Helping our people
navigate cost-of-living
pressures; providing
support for our people
to help ease financial
pressures, including
through targeted
cost-of-living payments.
Building a future
talent pipeline
Attracting a strong and
diverse pipeline of
talent to meet our
growth plans; through
strengthening our
technical talent value
proposition to ensure
we attract, recruit and
retain the best in the
industry.
Advancing our
technology
capabilities
Continually developing
our specialised
capabilities in line with
rapidly advancing
automotive technology
and drive train
electrification;
enhancing our industry-
leading IMI-approved
technical training facility.
Read more about
our commitment
in our Sustainability
Report FY2023
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CEO Q&A
CEO Q&A with
Martin Ward
How do you see your strategic priorities?
Our current strategy to build an integrated mobility platform
was put in place at the time of the merger in 2020, and uses
a well-recognised transformation framework. It has served
us well as we merged the two businesses together, while
also building the integrated mobility platform which we
have today. With six acquisitions undertaken since 2020,
it has also helped us to evaluate the growth opportunities
we come across.
Our strategic priorities continue to be centred around
enhancing the strong mobility platform we have developed
and the potential it offers us to drive growth in the business.
We always have customer service at the heart of our offering,
and a focus on delivering on our customer needs and
requirements remains core to our business model, more than
ever before.
We are also recognising how important an enabler we can
be for our customers; both in terms of helping their efficiency
programmes through being a trusted outsourcing partner, and
also more fundamentally with regards to energy transition.
The move away from the internal combustion engine is
a fundamental structural shift for society, and one which
brings to our business far more opportunities than challenges.
This is very much in tune with our broad growth ambitions,
ensuring we are able to capitalise on opportunities as they
present themselves.
Describe the concept of
integrated mobility platform
The concept of mobility and mobility solutions is more widely
understood in Europe and the US, and encompasses all of
the products and services necessary to support business’s
and people’s transport needs. It goes beyond the obvious
of getting from point A to B and caters for all aspects of
support from rental, vehicle breakdown, accident assistance,
roadside accident recovery, service, maintenance, repair,
replacement vehicles, data, telematics and more. In the UK,
the concept is starting to gain better traction, particularly
as elements such as urban mobility are becoming more
mainstream, alongside the growth in outsourcing a broad
range of services.
Within our own customer base, the benefits of our platform
are increasingly appreciated and as we add more services
and products, customers can see material benefits and cost
savings from working with us across the board. There are
plenty of opportunities to expand the platform and enhance
its usefulness for customers, and we see this as being a key
driver of growth.
What is your view on
digitalisation opportunities?
Digitalisation is very much aligned with our plans for
enhancing our service offering and seamlessly integrating
our platform. The increased levels of transparency,
responsiveness and scalability of the platform and what
it can offer customers becomes even clearer through
accessible digital channels.
We see this as a continuing process, which is underway and
which will take a number of years to fully deliver, in planned
incremental steps. But when taken together with the benefits
of our multi-service mobility solutions, it has the potential to
offer additional efficiencies and customer service tools,
such as greater data-driven insights, a more seamless
claims management journey and shared cost savings.
What are your net zero ambitions?
We would like to achieve net zero as soon as we can credibly
achieve this, supported by considered plans that can deliver
measurable reductions in the business with targets that the
workforce and the board can achieve. To do this we have
needed a clearer understanding of our net zero trajectory
which was something we have worked on this year. The reality
is that it is all about transitioning our vehicle fleets to EVs with
customers who will have different timescales.
For our Redde repair hire fleet, it will need to reflect the UK
car parc, i.e. what policyholders or customers are driving.
Within our rental fleets, the key issues are around identifying
LCVs with a commercially-viable driving range, load capacity
and accessible charging infrastructures; which are all currently
barriers to rapid adoption. We are working hard to address
these barriers, helping our customers take their first steps in
bringing EVs onto their fleets.
Our non-vehicle related emissions are less than 1% of our
footprint. We will seek to reduce emissions where we can
directly influence decision making and drive behavioural
change, alongside initiatives such as solar energy for our
branches. We have set Scope 1 and Scope 2 targets which
are outlined in this report, and are setting ourselves
measurable reduction targets to perform against.
Where has inflation most impacted the business?
Inflation has had a significant impact on all our stakeholders
over the past year, and we have looked to mitigate these as
far as possible. Energy inflation has been felt most significantly
within our workshops and bodyshops and we have found it
necessary to pass on much of this increase, as well as looking
at ways to reduce our consumption.
Supply chain inflation coupled with parts delays have been
a challenge for the business, and we have sought to be as
transparent as possible with customers to best manage
expectations; we have sought to ensure they understand
what we are doing to try and ensure the maintenance of
our high levels of customer service, in what have been
challenging times with very limited visibility.
Our people have always been our key asset, and we have been
very mindful of the impact that the current cost-of-living
challenges are having at both work and home. Having an open
and caring culture, wellbeing support, together with targeted
salary increases and one-off cost-of-living payments are ways
we have sought to ensure we look after those most impacted.
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The acquisition was clearly
a nervous time for us all; we
had moved from working for
a small family-run company to
being part of a multi-national
PLC overnight.
The support, assistance and
guidance I have received
personally from all areas
within Redde Northgate
has been exceptional.
The future for Blakedale and
our loyal customers looks
very prosperous. I don’t know
what I was worried about!”
Sales Manager,
Blakedale
Blakedale
acquisition
We acquired Blakedale, a family-owned supplier
of specialist traffic management vehicles in July
2022. Based in Lancashire, over the past 30 years it
had built itself into the UK’s largest privately owned
traffic management vehicle hire company.
Case study
Blakedale
Blakedale’s specialist fleet of bespoke
vehicles ranges from small traffic
maintenance vans to 18 tonne impact
protection vehicles.
These vehicles, along with
Blakedale’s sales packages and
repair and maintenance services
are supplied to highway contractors
on both short and long-term rental as
well as contract hire. The vehicles are
used on high speed roads such as
motorways and dual carriageways
as well as urban environments.
With a highly customer-focused
offering, Blakedale relationships go
back over 15 years with many of its
major customers. This made it a
natural fit for Redde Northgate,
sharing a similar culture and a
complementary customer base.
The acquisition has enabled the
Group to grow its share of the traffic
management sector at a time when
the Government has pledged
strategic long term investment
in UK roads until 2050.
Since acquisition
Performance has been very strong,
with significant fleet growth and a
broadening customer base, as we
brought the capabilities of our
integrated mobility platform to the
business, including the development
of an e-LCV offering.
• 30% growth in fleet to over
425 vehicles
• 28% growth in the customer base
• 100% score for employee pride
in their service offering
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A year of
considerable
achievement
Chairman’s statement
Overview
The successful delivery of substantial growth
in financial performance and progress on
our strategic priorities is testament to the
strength and resilience of the Group’s
business model and integrated mobility
platform which has been built up over the
past three years.
It has been a year of considerable
achievements which have together delivered
record results placing us in a very strong
position for future growth, particularly as
supply chains start to normalise.
Our broadening service offering allows the
Group to offer an integrated proposition to
our customers, providing greater simplicity
and efficiency benefits through outsourcing
to us, and this has been central to our
success in winning large multi-year contracts
which we onboarded in the year.
We continue to actively review inorganic
growth opportunities across our geographies,
with the acquisitions of Blakedale and most
recently FridgeXpress adding specialist
capabilities to the platform.
This Annual Report and Accounts has the
combined theme of customers and our
people; a reflection that these sit at the
heart of our business proposition.
Strategic focus
It is an exciting time within the automotive
sector, with technology delivering innovation
at pace in a number of areas: from EV
battery technology, rethinking urban
mobility and new OEMs entering the market.
This is alongside greater opportunities for
digitalisation, including the rapidly emerging
potential of AI, to help deliver material
benefits in customer service and
responsiveness through greater automation
of processes and the better use of data.
We are excited by these innovations and
the opportunities they present for the Group,
and are confident that we have the business
model, depth of experience and financial
capacity to take advantage as they arise.
We are increasing our focus on enhancing
customer service and delivery, growth
opportunities and our role as an enabler
within the sector.
Capital allocation
The conservative capital allocation
approach is an important priority for the
Board. The financial strength of our business
provides us with substantial purchasing
capacity which is of particular advantage
when responding rapidly to new vehicle
supply availability.
Within this context, our strong performance
meant we felt it appropriate in August 2022
to extend the buyback programme from
the initial £30m to £60m in total, around 7%
of the Group’s ordinary share capital.
Reflecting the Board’s continued optimism
for continued growth, we have proposed
a final dividend of 16.5p which along with
the interim dividend of 7.5p represents a
14.3% increase for the full year.
Sustainability
The Group is very mindful of the role it has
to play as an enabler of the low carbon
mobility transition for its customers in their
commercial mobility activities. The response
to our growing Drive to Zero customer
offering in both UK & Ireland and Spain has
demonstrated the value we can bring to
customers in what is set to be a complex
transition journey for many; this will increase
in importance for the business in the coming
years and we are adding products and
services to support our clients in managing
their transition.
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Watch branch of
the year video
Chairman’s statement continued
Within the business, we have also made
significant progress with our own
sustainability efforts. As set out in this report,
we have set up a Group Sustainability
Committee, defined medium term Scope 1
and Scope 2 targets and gained a better
understanding of our total emissions profile.
Our people
The Board is very appreciative of all our
Redde Northgate colleagues in the UK &
Ireland and Spain for their efforts and
successes over the past year, and thank
them for their dedication in challenging
market conditions. We continue to see a high
level of employee engagement both in our
employee survey and at the large number of
events and forums held throughout the year,
and are pleased to see a rise in underlying
engagement metrics, with our overall
engagement score remaining strong at 74%.
There has also been a clear focus on
supporting our colleagues at a time where
many are facing increasing financial burden
with the current cost-of-living pressures.
The Board was very supportive of proposals
to make special payments in December and
at year end, targeted at the lower end of
our salary scale, together with a number of
further actions to support our people at this
challenging time.
Board and governance
The Board has benefitted this year from the
addition of two Non-Executive Directors who
bring diverse skills and experience in relevant
areas for the Group. In May we welcomed
Bindi Karia, and in November we appointed
Nicola Rabson to the Board, whose
experience of people-related issues in
particular will be highly valued. The
composition of the Board is reviewed
regularly and I continue to explore further
opportunities to enhance the breadth and
skills of the Board.
We have also undertaken a significant
engagement programme as part of the
triennial review of our remuneration policy
which we are presenting for a vote at this
year’s AGM, consulting widely with major
shareholders and other key stakeholders.
Looking forward
Supported by the strong underlying
performance of the past year, the Group
is well placed to take advantage of
opportunities as they arise, and provides
the Board with confidence for another
year of progress in FY2024.
Avril Palmer-Baunack
Chairman
Branch of the year
Creating a customer focused
culture for success.
Case study
Northgate and Auxillis have been
running a Branch of the Year
competition for a number of years.
The purpose of the competition is
to recognise and reward customer
service excellence and teamwork.
The finalists are decided through
the allocation of points linked to
customer, financial, operational,
training and safety performance.
The eight highest performing
branches against these metrics were
shortlisted and were visited by the
judges who talked to customers being
serviced by these sites, taking their
views on board along with impressions
of the site and teams working there.
Before the live-streamed awards
event, all eight finalists created
their own short videos to introduce
their branch.
Blaydon (Auxillis) and Coventry
(Northgate) were awarded “Branches
of the year” with the special
recognition award going to Ashford
Auxillis branch in Kent. The branches
also voted for their best support
function; this year the asset team took
the “Team of the year” award.
It’s all about the team,
they’ve driven this, they’re
so resilient and have been
working so hard always putting
the customer at the front of
what we do. I’m so pleased
for them and proud of them.”
Robin Mercel
Branch Manager at Blaydon
The awards are designed
around the Group values
and encompass the level of
culture we want around all
our branches. The way the
teams have come together
is spectacular.”
Chris Jones
Branch Operations Director
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Making
strategic
progress
CEO review
Group overview
The Group has delivered stand-out
operational performances across many
areas with significant volume growth in our
accident management business and rental
revenue growth in both UK&I and Spain
reflecting continued strong demand
across our geographies.
Our focus has been on satisfying strong
customer demand through the
management of fleet acquisition and
disposals, and the successful onboarding of
all the significant multi-year insurer contracts
announced previously, which went live in the
first half of the year. Alongside growth in
value added services and the introduction
of new products and services, careful pricing
increases to offset cost inflation have helped
to maintain operating margins across the
business units; together these have enabled
us to achieve record results for both revenue
and profit.
Our integrated mobility platform has
demonstrated its potential and more
customers than ever are seeing the benefits
of taking multiple services from us and
enjoying the cost efficiencies this growing
platform affords them; this also helps support
greater customer retention. With acquisitions
of specialist traffic management vehicle
providers Blakedale in July 2022 and
temperature-controlled vehicle specialists
telematics, where over 10,000 units are now
in service, up 10%, as customers increasingly
look to monitor driver behaviours. A 50%
growth in customers covered by accident
management services in Northgate UK&I
in the year helped support rental margins
and customer retention, as customers see
benefits and efficiencies from leveraging
our broader fleet expertise. We also installed
over 6,700 charging points, including at an
increasing number of commercial locations.
In Spain, the economy has performed well
with strong activity from telecom and tourism
sectors. The opening up of our Spanish
workshops to third parties has been very
successful, with three notable contracts
signed in the year, increasing workshop
revenues by 60%. Pricing increases in both
Northgate Spain and Northgate UK&I have
been implemented in discussion with
customers, with average UK&I rental rates
rising close to inflation in the year.
Customer diversity remains broadly spread
across sectors, and the business continues
to actively manage customer and sector
exposures. In Northgate UK&I, no sector
accounts for more than 15% of LCV rental
VOH, and eight sectors each represent
over 7% of VOH. In Spain the largest sectors
remain construction and support services.
FridgeXpress in May 2023, we have also
extended our fleet customer proposition,
bringing an even broader range of customer
revenue streams onto the platform.
Growth drivers
Claims and services revenue growth of 37%
was achieved through increased traffic
volumes and the ramp-up of the multi-year
insurer contracts; these contracts have
reached their forecast activity levels. We are
confident that the pipeline of potential new
contracts and enhanced service provision
on existing contracts will deliver further
volume growth, including the scheduled
onboarding of a new leasing company
contract in Q2.
Our outsourcing proposition continues to
attract both insurer and leasing provider
interest as they look to benefit from the cost
and efficiency benefits that our platform can
offer at a time of significant claims inflation.
Insurers under protocol arrangements with us
grew to over 60% of our long term contracts
in the year, reflecting the trust and
efficiencies such arrangements afford both
parties, while actions such as energy cost
levies have been carefully managed.
Throughout the year demand for LCV rental
continued to outstrip supply across our
geographies, alongside increased demand
for additional services and products such as
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CEO review continued
Fleet availability
Fleet growth of 4,400 vehicles to 130,700 over
the past year reflects the success we have
had in accessing supply, particularly for cars,
to support our businesses and customer
needs. In Northgate Spain a broader range
of manufacturers supported fleet renewal
and growth, with the number of vehicles on
the fleet increasing 6% in the year; while in
the UK, whilst the number of vehicles on the
fleet decreased 6%, our OEM relationships
mean that we have early visibility of supply
and have had the financial capacity to
quickly respond to supply opportunities as
they come available.
We maintained our strategy of limiting
disposals and optimising fleet recycling when
vehicles come off hire, as well as seeking new
sources of supply. Both Van Monster and the
Spanish e-Auction online disposal portals
accounted for over 90% of fleet disposal
activities in their geographies and are
increasingly significant players in the online
marketplace. They offer a highly cost-efficient
route for defleeting vehicles, and a real-time
understanding of the used vehicle market.
We are starting to see a modest easing of
supply and parts constraints but are still a
way off “normal” supply levels, particularly in
the UK&I, and the cumulative undersupply of
new vehicles since 2020 is expected to keep
residual values high in the medium term.
Strategic focus
Our strategic priorities continue to be
centred around enhancing the strong
mobility platform we have developed and
the potential this offers us for growth in the
business and to integrate new products
and acquisitions. We always have customer
service at the heart of our offering, and a
focus on delivering to our customer needs
and requirements remains core to our
business model. Operationally this has
included opening our new branch in
Inverness and enhancing our digital
capabilities and ability to offer greater
commercial insights to customers.
We are also recognising how important
an enabler we can be for our customers;
both in terms of helping their efficiency
programmes through being a trusted
outsourcing partner, and also more
fundamentally with regards to energy
transition and the move to EVs. This is
gathering pace for passenger vehicles
but remains in its infancy for the commercial
LCV sector, particularly for those requiring
higher payloads or travelling long distances.
The acquisitions of Blakedale and
FridgeXpress have provided incremental
specialist vehicle capabilities that we can
build on through fleet investment and
broadening customer bases. Blakedale,
which specialises in traffic management
vehicles, achieved a 28% increase in the
number of customers and over 30% growth
in the vehicle fleet since acquisition. The
acquisition of FridgeXpress, a provider of
temperature-controlled vehicles and trailers
in the UK, was completed shortly after the
year end and offers a similar potential for
cross platform growth.
Together these acquisitions have added over
1,000 new specialist vehicles to the UK&I fleet
offering and the potential to provide both
Acquisition
of FridgeXpress
On 18 May 2023, Northgate Vehicle
Hire acquired FridgeXpress, which
provides short and long term
temperature controlled van rental
to a nationwide network of food
and pharmaceutical businesses
spanning from Kent to Scotland.
FridgeXpress runs a fleet of over 600
diesel and electric vans and trailers.
All vehicles are managed and
maintained centrally from its
workshop in Rugby supported by a
network of mobile service engineers.
It was one of the first companies to
add electric refrigerated vans to its
fleet to help customers tackle their
emissions particularly in urban areas.
Case study
existing and new customers with a broader
product offering. We continue to explore
inorganic opportunities across territories to
grow both our fleet and range of services
and remain alert to new technologies and
new suppliers looking to enter our markets.
The growing scale of our mobility platform
means that we are an increasingly attractive
partner for OEMs and other providers, such
as for the Spanish utility company Iberdrola,
where we have a new partnership to jointly
provide a complete EV solution comprising
vehicle, charging infrastructure and green
energy supply.
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Supporting sustainability
For customers, our Drive to Zero programme
supports fleet owners in identifying the right
strategy and first steps in utilising EVs, or
improving their fleet management and
driver behaviour to reduce current emissions.
This will rise in importance in the coming
years with the increase in the number of
low emission zones, alongside growing
requirements of governmental contracts
for the use of EV vehicles; and greater
accountability on progress towards net zero
targets. We are adding products such as solar
(UK&I) and bundled green energy (Spain)
to our charging and e-rental offerings, along
with advisory services to help customers
negotiate what remains an uncertain
regulatory and infrastructure-reliant
environment.
Within our business, our key people
engagement metric scored highly at 74%,
and we saw improvements in key underlying
areas, such as those seeing the business as
providing encouragement for their personal
development, and a 91% score for employees
feeling they work in a great team. This reflects
the efforts made to support our people
throughout their career with us, from learning
and development opportunities to enhanced
employee benefits and wellbeing support.
We know these are key elements in
maximising retention in what is a challenging
labour market and have significantly
increased the numbers (up over 150%) on
our apprenticeship scheme and expanded
our recruitment and outreach programmes.
We also supported cost-of-living pressures
with two targeted payments since December,
each to over 4,500 colleagues. We have
continued to invest in various communication
channels for the greater sharing of Group
news, values and culture, and our new
corporate and recruitment websites have
also increased the profile and accessibility
of information about the Group to external
stakeholders.
A new Group Sustainability Committee was
set up in the year, chaired by the CFO, with
separate working groups focused on key
aspects such as facilities, mobility and data,
and social impact. Our work this year has
enabled us to get a better understanding
of our environmental footprint, set Scope 1
and Scope 2 targets and enhance our TCFD
reporting. These targets, which comprise
100% renewable electricity and a 10%
reduction in our directly controlled emissions
by 2027, sit alongside our existing
commitments to reduce waste to landfill and
efforts to increase reuse and repair rather
than replacement and recycling across the
Group.
Financial strength
Our strong cashflows and balance sheet
supports business growth, a progressive
dividend as well as share buybacks. These
support agility and responsiveness both in
our fleet acquisition strategies and ability
to execute non-organic expansion.
With a strong fixed asset profile and resilient
cashflows, we offer an attractive profile to
lenders. We extended our bank facility by
an additional 12 months to 2026 in October,
which gave further flexibility and duration
to our borrowings, where 62% of our total
facilities are fixed, with maturities up to 2031.
The Group has a conservative approach to
capital allocation which has served us well,
and leverage has remained well within our
1-2x target range, at 1.5x at the year end.
Subject to shareholder approval, the
Board has proposed a final dividend of
16.5p per share (2022: 15.0p) to be paid
on 29 September 2023 to shareholders
on the register as at close of business on
1 September 2023, bringing the total dividend
to 24.0p (2022: 21.0p), a 14.3% increase on
the prior year.
During the year we extended the share
buyback programme announced in March
2022 from the initial £30m to £60m. This
programme was completed in December
2022 having acquired 16.9m shares equating
to 7% of ordinary share capital, a risk-free
enhancement of shareholder returns.
Presently, we are seeing many opportunities
to grow value for the long term, although
we continue to view buybacks as a useful
element within our capital allocation
framework, alongside a progressive
dividend, and this will be kept under review.
Outlook
We continue to enjoy robust demand as
we start FY2024 and our recent signing of
a further multi-service outsourcing contract
for Redde reflects our healthy new business
pipeline. With exciting opportunities across
the platform, we expect to continue to
make strategic progress; together with good
momentum in the business we are confident
and are well-placed to continue to create
long-term value for shareholders.
Martin Ward
Chief Executive Officer
CEO review continued
Notable awards won
in the year
Watch our
Apprentices video
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Redde Northgate plc
Annual Report and Accounts 2023
Growing our
technical talent pool
There is a shortage of skilled vehicle technicians
in the automotive repair and maintenance sector.
They are in high demand with growing competition in
the employment market for their services. To address
the challenge of skill shortages we have invested
heavily in advancing our technical capability and
capacity, across the Group.
Case study
This includes strengthening our
technical talent value proposition to
ensure we recruit and retain the best
in the industry. We strongly believe
that high quality and rewarding
apprenticeships and trainee
experiences will reduce the number
of internal vacancies and secure
a pipeline of talent to support our
ambitious business growth plans.
An Apprenticeship Hub, located
on our internal learning platform
provides a wealth of information
on how an apprenticeship can help
boost our people’s skills to grow their
career with us.
• Mentoring apprentices: to support
the transition of young people into
the workplace and in passing on
skills and experience
• Knowledge and skills rewards:
creating an environment where
they are encouraged to learn
and become more confident
vehicle engineers
• Technician forums: to allow
sharing of experience and
suggesting opportunities
for improvement
171
current apprentices
on programme
157
apprentice mentors
now trained
25
existing colleagues enrolled onto
apprenticeship programmes
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Financial
Our KPIs
We use our KPIs to assess and monitor the performance of the Group and to measure progress
against how we execute our strategy.
Remuneration
Our financial metrics form the majority of the elements within Executive Director and leadership team performance compensation: 75% of annual bonus is based on PBT targets and 25% from
non-financial objectives, including both operational and environmental elements whose outcomes are seen within our non-financial KPIs; Long term incentives are focused equally on PBT and
EPS targets. (Read more in the Remuneration report – pages 98 to 124.)
Our core financial KPIs
Our core financial KPIs measure progress of our strategic priorities in delivering profitability,
revenue and returns.
Revenue (excluding vehicle sales)
£1,336.9m
+22.2%
0 300 600 900 1200 1500
879.6m
1,093.6m
1,336.9m
2
023
2
022
2
021
How we calculate it
Underlying revenue includes hire of vehicles
and claims and services revenue but does not
include sale of vehicles at end of rental life.
Why it matters
Underlying revenue measures levels of Group
activity across internal organic growth and
acquisitions and excludes the distorting effect
of revenues from vehicle disposals which can
vary depending on timing of fleet replacement.
How we performed
Underlying revenue growth was supported by
significant growth in Redde from existing and
new multi-year insurance contracts, plus
managed increases in hire rates across the
rental businesses.
Risks
1
2
3
4
6
7
8
ROCE
14.1%
+0.2ppt
0 3 6 9 12 15
9.5%
13.9%
14.1%
2
023
2
022
2
021
How we calculate it
ROCE is calculated as underlying operating
profit divided by average capital employed.
Why it matters
In a capital intensive business ROCE measures
how efficiently the Group allocates capital;
it also provides a comparable metric across
the Group’s divisions.
Performance
The improvement in ROCE reflected our focus
on maintaining strong cost control and a
disciplined capital allocation approach.
Risks
1
2
3
7
Underlying profit before tax
£165.9m
+9.7%
0 50 100 150 200
£93.2m
£151.3m
£165.9m
2
023
2
022
2
021
How we calculate it
Underlying PBT is stated excluding exceptional
costs and other recurring amounts including
amortisation on acquired intangibles and
certain adjustments to depreciation.
Why it matters
Underlying PBT is our key measure of profitability
and performance and identifies the success in
delivering business growth, efficiencies and
operating margins.
How we performed
Underlying PBT grew due to strong operational
performance and volume growth, together with
maintenance of rental margins, partially offset
by higher interest costs.
Risks
1
2
3
7
Underlying earnings per share
55.6p
+9.5%
0 10 20 30 40 50 60
31.0p
50.8p
55.6p
2
023
2
022
2
021
How we calculate it
Underlying EPS is calculated as underlying profit
after tax, divided by the weighted average
number of ordinary shares excluding shares
held in treasury and employee trusts.
Why it matters
Underlying EPS is a key measure of value creation
and helps the Board consider how to allocate
capital including returns to shareholders.
How we performed
Growth in underlying EPS came through growth
in net profit together with the positive impact of
the share buyback programme completed in
the year.
Risks
1
2
3
7
Growth Profit Returns Capital allocation
Risk key
1. Economic environment
2. Market risk
3. Vehicle supply
4. The employee environment
5. Legal and compliance
6. IT systems
7. Recovery of contract assets
8. Access to capital
Key performance indicators
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Key performance indicators continued
Operational Customer People Environment
Fleet size
(‘000)
130.7
+3%
Utilisation
92%
–%
What we are measuring
The growth in our fleet across both rental and
accident management segments, while rental
utilisation looks at the average percentage of
the Group’s rental fleets on hire in the year.
Why it matters
Fleet growth is a key indicator of achieving
growth, while rental utilisation reflects
operational and asset efficiency.
How we performed
Fleet growth of 4% reflects challenges of
LCV supply, particularly in the UK; with growth
in Spain and Redde fleets. Maintaining rental
utilisation above 90% is a key operational target,
with 92% close to optimal level.
Risks
1
2
3
Trustpilot
1
4.4
Recommend
our service
1
86%
What we are measuring
We look at a range of customer feedback
channels including Trustpilot and other surveys
to provide an aggregated picture of how
customers find our service provision.
Why it matters
High levels of customer service are key to
ensuring customer and contract retention,
and feedback helps us to identify areas where
we can do better.
How we performed
Feedback remains strong despite the challenges
of limited vehicle supply. We have identified
areas for improvement which we are addressing
through our HIRE programme.
Risks
2
3
4
6
Employee
engagement
74%
-ppt
Attrition
25%
-5ppt
What we are measuring
How our people perceive the support,
recognition and reward they receive for their
efforts and in turn, the impact this has on their
desire to remain with Redde Northgate to
remain with us and build a rewarding career.
Why it matters
If we engage well with our people and they feel
valued, they are more likely to remain with us,
which has wide-ranging benefits for skills,
retention and customer service.
How we performed
Overall employee satisfaction was consistent
with the previous year and we saw an increase
in positive scores for culture, teamwork and
customer service. The impact of this was
reflected in a significant reduction in our rolling
annual voluntary attrition rate.
Risks
4
5
Fleet
emissions
1
134g/CO
2
Intensity
ratio
20
-8%
What we are measuring
The emission intensity of our operations relative
to turnover and the average fuel economy of
our total fleet.
Why it matters
Year on year increases in the provision of more
fuel-efficient and low emission vehicles will
enhance the environmental sustainability of our
operations and reduce our carbon footprint.
How we performed
This is the first year of measuring fleet emission
averages, therefore no trend is presented. Our
revenue, excluding vehicle sales grew by 22%
whilst our Scope 1 and Scope 2 emissions grew
by 12%. The resulting impact to emission intensity
is a decrease of 8%.
Risks
1
2
3
Risk key
1. Economic environment
2. Market risk
3. Vehicle supply
4. The employee environment
5. Legal and compliance
6. IT systems
7. Recovery of contract assets
8. Access to capital
Non-financial
Core non-financial KPIs
Our non-financial KPIs have been enhanced this year and we have been developing a broader
set which consider both operational performance and managing sustainable growth.
Strategy
Our strategic priorities (read more in the Remuneration report – pages 98 to 124) are centred around operational efficiency, business growth and expansion into new areas and technologies;
we have quantifiable metrics against these, both in terms of financial performance and returns, and non-financial KPIs which underpin different aspects of our strategic progress – these form
part of regular executive and Board review.
1: The Group has implemented a range of non-financial KPIs that were not previously being measured. As such no movement from the prior year is presented.
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Delivering
consistent
growth
Group revenue and EBIT
Year ended 30 April
2023
£m
2022
£m
Change
£m
Change
%
Revenue – Vehicle hire 610.5 563.3 47. 2 8.4%
Revenue – Vehicle sales 152.9 149.9 3.0 2.0%
Revenue – Claims and services 726.3 530.3 196.0 37. 0 %
Total revenue 1,489.7 1,243.6 246.1 19.8 %
Rental profit 102.3 91.7 10.6 11.6 %
Disposal profit 51.5 50.1 1.4 2.7%
Claims and services profit 44.5 31.8 12.7 40.1%
Corporate costs (11.6) (9.6) (2.0) 21.4%
Underlying operating profit 186.7 164.0 22.7 13.8%
Income from associates 2.5 3.9 (1.4) (34.8%)
Underlying EBIT 189.2 167.9 21.3 12.7%
Underlying EBIT margin
1
14.2% 15.4% (1.2ppt)
Statutory EBIT 202.0 150.8 51.2 34.0%
1 Calculated as underlying EBIT divided by revenue (excluding vehicle sales)
Revenue
Total Group revenue, including vehicle sales, of £1,489.7m was 19.8%
higher than prior year while revenue excluding vehicle sales of
£1,336.9m (2022: £1,093.6m), was 22.2% higher than the prior year.
Hire revenues increased 8.4% mainly due to higher VOH and pricing
actions to address cost inflation; Group VOH was 1.8% higher than the
prior year, with continued supply challenges constraining Northgate
UK&I, while Northgate Spain was able to grow, reflecting greater
availability of new vehicles. Claims and services revenue growth of
37.0% reflected higher activity including increased volumes from new
business wins which have launched in the past 12 months, and an
industry-wide rise in chargeable costs reflecting inflation across the
supply chain.
Group vehicle sales revenue increased by 2.0% due to a 9.6% increase
in the number of vehicles sold being partially offset by a change in
mix of vehicles sold and softening residual values in the UK. The total
fleet increased 3.4% in the year, up over 4,000 vehicles, including
those acquired through leasing, with outright fleet purchases of
23,100 (2022: 23,600).
EBIT
Statutory EBIT was up 34.0%, while underlying EBIT of £189.2m grew
12.7% compared to the prior year; reflecting strong rental performance
and higher volumes in Redde. The statutory EBIT includes a £46.5m
credit (2022: £nil) for adjustments to depreciation rates, amortisation
on acquired intangible assets of £20.2m (2022: £19.8m) and other
exceptional items of £13.5m (2022: £2.7m credits including £0.4m
credit for gain on bargain purchase).
Rental profit increased £10.6m to £102.3m (2022: £91.7m) with
a £2.5m increase in Northgate UK&I and an £8.1m increase in
Northgate Spain. Redde saw volume growth across its product
offerings, resulting in an £11.4m increase in underlying EBIT, including
income from associates, to £47.0m (2022: £35.6m).
Total disposal profits for the year of £51.5m were 2.7% higher than the
prior year with 18,200 vehicles sold (2022: 16,600) with residual values
remaining higher than historical pre-COVID-19 levels.
Financial review
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Northgate UK&I
Year ended 30 April
PROFIT & LOSS (Underlying)
2023
£m
2022
£m
Change
%
Revenue – Vehicle hire
2
367.7 346.6 6.1%
Revenue – Vehicle sales 104.9 111. 8 (6.1%)
Total revenue 472.6 458.4 3.1%
Rental profit 55.6 53.1 4.7%
Rental margin % 15.1% 15.3% (0.2ppt)
Disposal profit 37.8 44.8 (15.8%)
Underlying EBIT 93.4 98.0 (4.7%)
EBIT margin %
3
25. 4% 28.3% (2.9ppt)
ROCE % 16.3% 17. 5 % (1.2ppt)
2 Including intersegment revenue of £9.9m (2022: £3.9m)
3 Calculated as underlying EBIT divided by revenue (excluding vehicle sales)
Highlights
Rental revenue grew 6.1% in the year and was achieved through optimised utilisation and
active management of available fleet with a continued focus on selected market segments
and key clients; this was also supported by carefully targeted and communicated rate
increases to address cost inflation. This enabled average revenue per vehicle to increase 9%
on the prior year and maintain rental margin above the long-term target rate of 15%.
Managed ageing of the fleet also allowed greater support for strong customer demand
throughout the year when vehicles remained in short supply and average VOH of 48,900 was
2.6% lower than the prior year. This was echoed across the industry, with UK LCV registrations
being over 20% lower than FY2022, and touching levels last seen in 2014. This lack of supply
continues to support residual values however, which although softening in the year, are likely
to remain above pre-COVID-19 levels in the medium-term.
The business continues to increase income from its range of value-added services. During
the year vehicles under fleet and accident management increased by over 150% and our
telematics offering increased by 10%, exceeding 10,000 chargeable units for the first time.
We have succeeded in expanding cross platform products and services across the customer
base and have also expanded our range of services in Ireland.
We have grown our EVs on hire by 36%, and supported customers embarking on their transition
to electric vehicles through a range of services. These include consultancy on EV suitability for
specific purposes and routes using sophisticated modelling, driver training services, installation
of charging points and a series of EV Open Days around the country inviting customers to drive
a range of electric vans and to consult with our experts on how to manage the transition.
Our ChargedEV business installed over 6,700 charging points in the year and was impacted by
the slowdown in the delivery of electric vehicles to customers seeking charging solutions, this
situation is now easing. The business has won a number of new referral partners and supply
contracts, as well as moving to broaden its propositions and reach, including supporting a
Northgate bundled EV and charging solution. This includes moving into commercial
installations and preparing to add solar installations for consumers and commercial clients
to its product range.
Year ended 30 April
KPI
2023
(‘000)
2022
(‘000)
Change
%
Average VOH 48.9 50.2 (2.6%)
Closing VOH 46.5 49.2 (5.5%)
Average utilisation % 93% 92% 1ppt
Our specialist traffic management vehicle provider, Blakedale has been successfully integrated
into the Group. We have increased fleet volumes by over 30% since acquisition in July 2022
and secured additional chassis supply and production capability to take advantage of the
strong vehicle demand.
EBIT
Northgate UK&I underlying EBIT of £93.4m was 4.7% lower than the prior year (2022: £98.0m).
Rental profit increased £2.5m to £55.6m. Disposal profits decreased £7.0m to £37.8m reflecting
a 2.6% reduction in the number of vehicle sales.
ROCE was 16.3% (2022: 17.5%) reflecting the decrease in EBIT mainly as a result of lower disposals.
Rental
Compared to the prior year, hire revenue in Northgate UK&I increased 6.1% to £367.7m (2022:
£346.6m), with the reduction in average VOH being offset by an 9.0% increase in average
revenue per vehicle. Rate increases were applied across our full range of rental products.
Closing VOH of 46,500 was 2,700 lower than the prior year (2022: 49,200) with the shortage
in supply of new vehicles holding back growth in the year.
Northgate UK&I’s minimum term proposition accounted for 37% of average VOH (2022: 36%).
The average term of these contracts is approximately three years, providing both improved
visibility of future rental revenue and earnings, as well as lower transactional costs.
Rental margin for the year was 15.1% compared to 15.3% in the prior year. This is in line with
medium term guidance and was supported by pricing increases, partially offset by cost
inflation and investment to grow ChargedEV.
The overall impact of the reduction in VOH and greater rental revenue per vehicle was a
4.7% increase in rental profits to £55.6m (2022: £53.1m).
Management of fleet and vehicle sales
The closing Northgate UK&I rental fleet was 50,800 compared to 54,200 at 30 April 2022.
During the year, 4,800 vehicles were purchased (2022: 10,000) and 8,600 vehicles were
defleeted (2022: 10,400). The leased fleet increased by 400 vehicles.
The average age of the fleet was 36 months at the end of the year which was six months
higher than at 30 April 2022. This was due to managing the fleet to mitigate impacts of the
restricted market supply reducing both purchases and vehicles sold.
A total of 10,200 vehicles were sold in Northgate UK&I during the year, 2.6% lower than the prior
year (2022: 10,400 vehicles). Disposal profits of £37.8m (2022: £44.8m) decreased 15.8% versus
the prior year, reflecting the reduction in the number of vehicles sold and softening residual
values. Average profit per unit (PPU) on disposals decreased 13.6% to £3,700 (2022: £4,300).
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Northgate Spain
Year ended 30 April
PROFIT & LOSS (Underlying)
2023
£m
2022
£m
Change
%
Revenue – Vehicle hire 252.7 220.6 14.6%
Revenue – Vehicle sales 47.3 38.1 24.0%
Total revenue 300.0 258.7 16.0 %
Rental profit 46.7 38.6 20.9%
Rental margin % 18.5% 17. 5 % 1.0ppt
Disposal profit 13.7 5.3 160.7%
Underlying EBIT 60.4 43.9 37. 7 %
EBIT margin %
4
23.9% 19.9% 4.0ppt
ROCE % 12.9% 10.0% 2.9ppt
4 Calculated as underlying EBIT divided by revenue (excluding vehicle sales)
Highlights
Rental revenue rose 14.6% (11.9% in constant currency), achieved through both a significant
increase in VOH, up 6.2% to 53,600, together with pricing actions implemented for flexible and
term rental products. With continued positive Spanish GDP growth, demand remained strong
throughout the year and the main priority was sourcing vehicles to satisfy customers orders,
notably within fast growing sectors including infrastructure and support services.
Northgate expanded its portfolio of vehicle suppliers alongside strong relationships with
existing suppliers, helping gain access to more new vehicles than in the prior year. Defleets
were carefully managed, to allow necessary fleet renewal, but also to support VOH growth
to satisfy demand.
The rental margin of 18.5% was supported by the early implementation of price increases, partially
offset by inflation driven costs building through the year and especially in the second half.
Expectations remain that the margin will over time trend towards our medium-term guidance
of c.15% as the fleet is renewed but will continue to be supported through strong demand.
Northgate increasingly offered workshop-based repair services to third parties, utilising spare
capacity, and achieved 60% revenue growth. These revenues were supported by new repair
contracts signed with insurance companies and large fleet owners, including a referral from
a major UK insurance customer, and these workshop-based repair services have the potential
to become a meaningful multi-year revenue stream. A new agreement was signed with the
utility group, Iberdrola, to support a joint EV and charging initiative, to help fleet and retail
customers migrate to lower emission vehicles.
Vehicles were predominantly sold through our e-Auction platform, which provided the most
efficient disposal route. Given the shortfalls in vehicle supply and solid Spanish economic
growth, demand for used vehicles remained strong throughout the entire year and was
reflected in PPUs being double the prior year. Disposal profits increased to £13.7m (2022: £5.3m),
through both higher PPUs and increased disposal volumes (up 30%) as the business took
advantage of better sourcing to refresh portions of the fleet.
Year ended 30 April
KPI
2023
(‘000)
2022
(‘000)
Change
%
Average VOH 53.6 50.4 6.2%
Closing VOH 54.7 52.2 4.9%
Average utilisation % 92% 92% –
Alongside investment in the fleet and workshop capability, the business completed a second
phase of solar panels installation, with over 1.5 MW total generating capacity now installed to
date and delivering over an estimated 20% of annual energy consumption.
EBIT
Northgate Spain’s strong year resulted in underlying EBIT increasing £16.5m, a 37.7% increase
compared to the prior year driven by VOH growth of 6.2% and strong rental margins of 18.5%
compared to 17.5% in the prior year.
The ROCE in Northgate Spain was 12.9% (2022: 10.0%) reflecting the increase in rental margin,
disposal profits and an older fleet.
Rental business
Hire revenue in Northgate Spain increased 14.6% to £252.7m (2022: £220.6m), driven by the
increase in average VOH. Closing VOH increased 4.9% to 54,700.
Northgate Spain’s minimum term proposition accounted for around 35% (2022: 35%) of
average VOH. The average term of these contracts is approximately three years, providing
visibility of future rental revenue and earnings.
The rental margin was 1.0ppt higher than the prior year at 18.5% from pricing increases with
some cost inflation offsetting this.
The impact of increase in hire revenue and rental margin was a 20.9% increase in rental profits
to £46.7m (2022: £38.6m).
Management of fleet and vehicle sales
The closing Northgate Spain rental fleet was 61,400 compared to 57,600 vehicles at 30 April 2022.
During the year 13,200 vehicles were purchased (2022: 10,900) and 9,400 vehicles were
de-fleeted (2022: 5,100 vehicles). The average age of the fleet at the end of the year was
33 months, two months older than at the same time last year. This was due to managing the
fleet to mitigate impacts of the restricted market supply reducing purchases.
A total of 7,900 vehicles were sold in Northgate Spain during the year, 30% higher than the
prior year reflecting the sale of aged fleet following an increase in new fleet purchases.
Disposal profits of £13.7m (2022: £5.3m) increased 160.7% due to the increased number of
vehicles sold and continued strength in sales values, resulting in an increase in average profit
per unit (PPU) on disposals to £1,700 (2022: £900).
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Redde
Year ended 30 April
PROFIT & LOSS (Underlying)
2023
£m
2022
£m
Change
%
Revenue – Claims and services
5
738.9 543.7 35.9%
Revenue – Vehicle sales
6
31.0 – n/a
Total revenue 769.8 543.7 41.6%
Gross profit 151.5 12 7. 7 18.7%
Gross margin %
7
20.5% 23.5% (3ppt)
Operating profit 44.5 31.8 40.1%
Income from associates 2.5 3.9 (34.8%)
Underlying EBIT 47.0 35.6 32.0%
EBIT margin %
7
6.4% 6.6% (0.2ppt)
ROCE % 15.9% 16.6% (0.7ppt)
5 Including intersegment revenue of £12.5m (2022: £13.4m)
6 Including intersegment revenue of £30.3m (2022: £nil)
7 Gross profit margin calculated as underlying gross profit divided by total revenue. EBIT margin calculated as
underlying EBIT divided by total revenue excluding vehicle sales
Highlights
Claims and services revenues for the Redde businesses rose 35.9% in the year; and total
revenues grew 41.6% when vehicle sales are included. This was due to increased volumes and
claims activity, through a near-full return to pre-pandemic traffic volumes, and from a number
of new insurer contracts which went live in the year. Vehicles sales volumes this year reflected
the replacement of fleet that was deferred last year due to allocating all purchases for growth.
The multi-year insurer contracts announced in FY2022 all went live during the first half of the
year and will therefore deliver a full annual contribution next year. The significant resource
and investment in systems, vehicles, people and technology, required to scale these
multi-year contracts have also helped deliver a differentiated integrated claims proposition,
covering the lifecycle of an accident claim within the Redde businesses.
The recent live contracts represented a mix of direct hire and credit hire and repair; each
have different margin profiles, delivering significant volume growth for the business.
Redde offers an attractive proposition to insurers and fleets who are considering partial or
full outsource of their accident or claims management, offering a unique blend of centres of
excellence for claims and a network of physical assets in terms of mobility and vehicle repair.
The increasing scale offers more potential for operational and system efficiencies to help
mitigate inflationary increases in operational overheads, which were partially shared in the
year with customers and partners through charges such as energy levies.
Our FMG RS owned repair sites are now an integral part of our overall market proposition,
working alongside our existing independent network. This integrated approach in the UK
provides insurers with a comprehensive, UK wide solution.
There is a strong focus on growing repair and workshop technician capacity through our
industry-leading apprentice scheme and internal skills and development programmes
alongside other investments in the business and its network.
EBIT
Revenue for the year (excluding vehicle sales) increased 35.9% to £738.9m (2022: £543.7m)
reflecting the increase in traffic volumes seen in the prior year and a continuing extension in
hire length during the year due to the impact of macro challenges in supply chains for parts
and labour.
Gross margin of 20.5% decreased 3ppt (2022: 23.5%) due to volume mix within the business.
During the year underlying EBIT has increased by 32.0% over the prior year to £47.0m, with the
growth in volumes seen last year continuing throughout the year. The EBIT margin of 6.4% was
0.2ppt lower than the prior year, and principally reflects the change in product mix and new
contract investment.
Management of fleet
The total fleet in Redde was 18,500 vehicles at the end of the year, compared to 14,500 at
30 April 2022 with the fleet growth supporting the increase in the volume of credit hires.
The average fleet age was 15 months (2022: 11 months) reflecting the lower fleet holding
period than in the Northgate businesses due to the different usage of vehicles and the
optimal holding period of this vehicle mix.
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Group PBT and EPS
Year ended 30 April
2023
£m
2022
£m
Change
£m
Change
%
Underlying EBIT 189.2 167. 9 21.3 12.7%
Net underlying finance costs (23.3) (16.6) (6.7) 40.4%
Underlying profit before taxation 165.9 151.3 14.6 9.7%
Statutory profit before taxation 178.7 132.7 46.0 34.7%
Underlying effective tax rate 22.6% 17. 4 % 5.2ppt
Underlying EPS (p) 55.6 50.8 4.8 9. 5%
Statutory EPS (p) 60.3 41.3 19. 0 46.2%
Profit before taxation
Underlying PBT was 9.7% higher than prior year reflecting the higher EBIT across the Group.
Statutory PBT was 34.7% higher including a £46.5m credit relating to adjustments to depreciation
rates on the older fleet as explained last year and further below.
Exceptional items
Exceptional costs of £13.5m (2022: £2.7m credits including £0.4m credit for gain on bargain
purchase) were incurred in the year, with a £13.5m charge arising from the impairment of
goodwill, and other intangibles of NewLaw following a strategic review of the Group.
Further detail on exceptional items is included in the notes to the financial statements.
Amortisation of acquired intangibles is not an exceptional item as it is recurring. However,
it is excluded from underlying results in order to provide a better comparison of performance
of the Group. The total charge for the year was £20.2m (2022: £19.8m). Total credits of £46.5m
(2022: £nil) have been excluded from underlying results in relation to depreciation rate
adjustments on vehicles purchased before FY2021 in order to better compare results over time
as explained further below.
Depreciation rate changes
When a vehicle is acquired, it is recognised as a fixed asset at its cost net of any discount or
rebate received. The cost is then depreciated evenly over its rental life, matching its pattern
of usage down to the expected future residual value at the point at which the vehicle is
expected to be sold net of directly attributable selling costs.
Accounting standards require a review of residual values during a vehicle’s useful economic
life at least annually, with changes to depreciation rates being required if the expectation of
future values changes significantly.
Matching of future market values of vehicles to net book value (NBV) on the estimated
disposal date requires significant judgement for the following reasons:
• Used vehicle prices are subject to short term volatility which makes it challenging to
estimate future residual values;
• The exact disposal age is not known at the point at which rates are set and therefore the
book value at disposal date is not certain; and
• Mileage and condition are the key factors in influencing the market value of a vehicle.
These can vary significantly through a vehicle’s life depending upon how the vehicle
is used.
Due to the above uncertainties, a difference normally arises between the NBV of a vehicle
and its actual market value at the date of disposal. Where these differences are within an
acceptable range they are adjusted against the depreciation charge in the income statement.
Where these differences are outside of the acceptable range, changes must be made to
depreciation rate estimates to better reflect market conditions and the usage of vehicles.
Residual values have increased significantly over the previous two financial years due to
the disruption of new vehicle supply that has increased demand for used vehicles. Up to this
point, no changes have been made to depreciation rates on existing fleet vehicles as the
extent and longevity of this buoyancy in residual values has been uncertain. However, it has
continued for longer than anticipated and uncertainty remains over how long it will take for
supply of new and used vehicles to return to a more normal level.
For this reason, there are a number of vehicles on our fleet where the depreciated book value
is below or very close to the expected residual value at disposal. In line with the requirements
of accounting standards and as previously disclosed, a decision was made to reduce
depreciation rates from 1 May 2022 on certain vehicles remaining on the fleet which were
purchased before FY2021.
The actual phasing of the adjustment will change if these vehicles are held for a longer or
shorter period than anticipated. The depreciation rate change is expected to impact the
statutory income statement over the remaining holding period of those vehicles as follows:
£m FY2023 FY2024 FY2025 FY2026 FY2027 Total
Reduced depreciation 55.1 46.7 22.3 5.4 0.1 129. 6
Reduced disposal profits (8.6) (34.0) (50.6) (31.8) (4.6) (129. 6)
Updated expected impact on statutory EBIT 46.5 12.7 (28.3) (26.4) (4.5) –
Previously expected impact on statutory EBIT 46.8 (9. 4) (2 9.8) (6.7) (0.9) –
No further depreciation rate changes have been made on the existing fleet since the impact
on EBIT was outlined last year. The updated phasing of the adjustment relates entirely to an
updated expectation to hold the older vehicles in the fleet for longer than originally envisaged.
The impact of the changing depreciation rates on this component of the fleet will re-phase
statutory EBIT over this five-year period but will have no impact on underlying results, no
overall impact on statutory profit over the life of the fleet and does not impact cash.
The disposal profits of vehicles purchased since FY2021 are expected to be broadly in line with
original expectations. Depreciation rates on vehicles purchased in FY2024 will be set based
on management’s best estimates of future residual values when those vehicles are sold, with
holding periods ranging from 12 to 60 months.
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Interest
Net underlying finance charges increased to £23.3m (2022: £16.6m) due to higher average
debt and the increase in floating interest rates over the year. The increase in interest rates
was largely sheltered due to holding 62% of borrowing as fixed rate debt.
Taxation
The Group’s underlying tax charge was £37.6m (2022: £26.3m) and the underlying effective
tax rate was 22.6% (2022: 17.4%). The statutory effective tax rate was 22.1% (2022: 23.5%).
Earnings per share
Underlying EPS of 55.6p was 4.8p higher than prior year, reflecting increased profits in the year
and a 2.7p impact of the share buyback programme.
Statutory EPS of 60.3p was 19.0p higher, reflecting the movement in underlying EPS and the
impact of exceptional items and adjustments to deprecation rates which are not included
within the underlying results.
Business combinations
In July 2022 the Group acquired 100% of the equity capital of Blakedale Limited for provisional
consideration of £10.1m. The provisional fair value of net assets acquired was £6.1m resulting in
the recognition of £4.0m of goodwill.
Share buyback programme
The Group completed its share buyback programme in December 2022. The Group purchased,
and holds in treasury, 16,877,571 ordinary shares (2022: 1,825,991) for a total consideration of
£60.5m including £7.5m acquired in the prior year. The shares held in treasury are of par value
50p each, representing 7% of the Company’s issued ordinary share capital.
Group balance sheet
Net assets at 30 April 2023 were £994.6m (2022: £946.8m), equivalent to net assets per share
of 434p (2022: 388p). Net tangible assets at 30 April 2023 were £752.9m (2022: £680.5m),
equivalent to a net tangible asset value of 328p per share (2022: 279p per share).
The calculations above are based on the number of shares in issue at 30 April 2023 of
246,091,423 (2022: 246,091,423) less treasury shares of 16,877,571 (2022: 1,825,991).
Gearing at 30 April 2023 was 92.2% (2022: 85.6%) and ROCE was 14.1% (2022: 13.9%).
Group cash flow
Steady state cash generation and free cash flow
Year ended 30 April
2023
£m
2022
£m
Change
£m
Underlying EBIT 189.2 167.9 21.3
Depreciation and amortisation
8
223.0 198.8 24.2
Underlying EBITDA 412.2 366.7 45.5
Net replacement capex
9
(155.6) (106.7) (48.9)
Lease principal payments
10
(65.1) (43.7) (21.4)
Steady state cash generation 191.5 216.4 (24.9)
Exceptional costs (excluding non-cash items) – (0.7) 0.7
Working capital and non-cash items (0.3) (33.5) 33.2
Growth capex
9
(122.6) (108.6) (14.0)
Taxation (36.6) ( 27. 4 ) (9. 2)
Net operating cash 32.0 46.2 (14.2)
Distributions from associates 3.1 4.1 (1.0)
Interest and other financing (20.6) (30.0) 9.4
Acquisition of business (10.0) (0.5) (9.5)
Free cash flow 4.5 19. 8 (15.3)
Dividends paid (52.2) (43.9) (8.3)
Payments to acquire treasury shares (53.0) (7. 5 ) (45.5)
Lease principal payments
11
65.1 43.7 21.4
Net cash (consumed) generated (35.6) 12.0 (47. 6)
8 Depreciation and amortisation excludes £46.5m (2022: £nil) of depreciation adjustment credits and £20.2m
(2022: £19,8m) of amortisation of acquired intangibles both excluded from underlying results
9 Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order
to grow the fleet or the cash that is generated if the fleet size is reduced in periods of contraction (excluding
leased fleet)
10 Lease principal payments are included so that steady state cash generation includes all maintenance capex
irrespective of funding method
11 Lease principal payments are added back to reflect the movement on net debt
Steady state cash generation
Steady state cash generation remained strong at £191.5m (2022: £216.4m), driven by
underlying EBIT performance, offset by an increase in net replacement capex.
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Financial review continued
Net capital expenditure
Net capital expenditure increased by £62.9m to £278.2m (2022: £215.3m) due to a £48.9m
increase in net replacement capex
9
and a £14.0m increase in growth capex
9
.
Net replacement capex was £155.6m (2022: £106.7m), £48.9m higher than the prior year with
an increase in the average replacement cost due to a change in mix of vehicles replaced
and a higher replacement cost due to price inflation.
The net replacement capex outflow was £21.8m higher in Spain, £11.8m higher in Redde and
£15.3m higher in UK&I.
Lease principal payments of £65.1m (2022: £43.7m) increased £21.4m due to a larger leased
fleet size and final payments on legacy hire purchase contracts.
Free cash flow
Free cash flow decreased by £15.3m to £4.5m (2022: £19.8m) driven by an increase in net
capex as explained above and also £10.0m cash consideration for the Blakedale acquisition.
Removing the impact of growth capex in the year, the underlying free cash flow of the Group
was £127.1m compared to £128.4m in the previous year.
Net cash generation
Net cash consumed of £35.6m (2022: £12.0m generated) includes £52.2m of dividends paid
(2022: £43.9m) and £53.0m (2022: £7.5m) for treasury shares purchased as part of the
previously announced buyback programme.
Net debt
Net debt reconciles as follows:
As at 30 April
2023
£m
2022
£m
Opening net debt 582.5 530.3
Net cash consumed (generated) 35.6 (12.0)
Other non-cash items 57.8 76.8
Exchange differences 18.5 (12.6)
Closing net debt 694.4 582.5
Closing net debt increased by £111.9m in the year driven by net cash consumed, non-cash items
and exchange differences. Other non-cash items consist of £56.8m of new leases acquired
and £1.0m of other items. Foreign exchange movements increased net debt by £18.5m.
Borrowing facilities
As at 30 April 2023 the Group had headroom on facilities of £290m, with £544m drawn
(net of available cash balances) against total facilities of £834m as detailed below:
Facility
£m
Drawn
£m
Headroom
£m Maturity
Borrowing
cost
UK bank facilities 490 202 288 Nov 26 6.0%
Loan notes 330 330 – Nov 27-Nov 31 1.3%
Other loans 14 12 2 Nov 23 2.8%
834 544 290 3.1%
The other loans drawn consist of £11m of local borrowings in Spain which were renewed for
a further year in November 2022 and £0.5m of preference shares.
The above drawn amounts reconcile to net debt as follows:
Drawn
£m
Borrowing facilities 544
Unamortised finance fees (7)
Leases 157
Net debt 694
The overall cost of borrowings at 30 April 2023 is 3.1% (2022: 1.9%).
The margin charged on bank debt is dependent upon the Group’s net debt to EBITDA ratio,
ranging from a minimum of 1.45% to a maximum of 3.25%. The net debt to EBITDA ratio at
30 April 2023 corresponded to a margin of 1.95% (2022: 1.95%).
The split of net debt by currency was as follows:
As at 30 April
2023
£m
2022
£m
Euro 388.0 373.6
Sterling 313.2 216.8
Borrowings and lease obligations before unamortised arrangement fees 701.2 590.4
Unamortised finance fees (6.8) (7. 9)
Net debt 694.4 582.5
There are three financial covenants under the Group’s facilities as follows:
As at 30 April Threshold 2023 Headroom 2022
Interest cover 3x 10.6x £133m (EBIT) 14.4x
Loan to value 70% 42% £371m (Net debt) 41%
Debt leverage 3x 1.5x £186m (EBITDA) 1.4x
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Financial review continued
The covenant calculations have been prepared in accordance with the requirements of the
facilities to which they relate.
Dividend and capital allocation
Subject to approval, the final dividend proposed of 16.5p per share (2022: 15.0p) will be
paid on 29 September 2023 to shareholders on the register as at close of business on
1 September 2023.
Including the interim dividend paid of 7.5p (2022: 6.0p), the total dividend relating to the year
would be 24.0p (2022: 21.0p). The dividend is covered 2.3x by underlying earnings.
The Group’s objective is to employ a disciplined approach to investment, returns and capital
efficiency to deliver sustainable compounding growth. Capital will be allocated within the
business in accordance with the framework outlined below:
• Funding organic growth
• Sustainable and growing dividend
• Inorganic growth
• Returning excess cash to shareholders
The Group plans to maintain a balance sheet within a target leverage range of 1.0x to 2.0x
net debt to EBITDA, and during periods of significant growth net debt would be expected
to be towards the higher end of this range. This is consistent with the Group’s objective of
maintaining a balance sheet that is efficient in terms of providing long term returns to
shareholders and safeguards the Group’s financial position through economic cycles.
Treasury
The function of the Group’s treasury operations is to mitigate financial risk, to ensure sufficient
liquidity is available to meet foreseeable requirements, to secure finance at minimum cost
and to invest cash assets securely and profitably. Treasury operations manage the Group’s
funding, liquidity and exposure to interest rate risks within a framework of policies and
guidelines authorised by the Board of Directors.
The Group uses derivative financial instruments for risk management purposes only. Consistent
with Group policy, Group Treasury does not engage in speculative activity and it is Group
policy to avoid using more complex financial instruments.
Credit risk
The policy followed in managing credit risk permits only minimal exposures with banks and
other institutions meeting required standards as assessed normally by reference to major
credit agencies. Group credit exposure for material deposits is limited to banks which
maintain an A rating. Individual aggregate credit exposures are also limited accordingly.
Liquidity and funding
The Group has sufficient funding facilities to meet its normal funding requirements in the
medium term as outlined in the borrowing facilities section above. Covenants attached
to those facilities as outlined above are not restrictive to the Group’s operations.
Capital management
The Group’s objective is to maintain a balance sheet structure that is efficient in terms of
providing long term returns to shareholders and safeguards the Group’s financial position
through economic cycles.
Operating subsidiaries are financed by a combination of retained earnings and borrowings.
The Group can choose to adjust its capital structure by varying the amount of dividends paid
to shareholders, by issuing new shares or by adjusting the level of capital expenditure.
Interest rate management
The Group’s bank facilities, other loan agreements and lease obligations incorporate variable
interest rates. The Group seeks to ensure that the exposure to future changes in interest rates
is managed to an acceptable level by having in place an appropriate balance of fixed rate
and floating rate financial instruments at any time. The proportion of gross borrowings
(including leases arising under HP obligations) held in fixed rates was 62% at 30 April 2023
(2022: 76%).
Foreign exchange risk
The Group’s reporting currency is Sterling and 78% of its revenue was generated in Sterling
during the year (2022: 77%). The Group’s principal currency translation exposure is to the Euro,
as the results of operations, assets and liabilities of its Spanish and Irish businesses are
translated into Sterling to produce the Group’s consolidated financial statements.
The average and year end exchange rates used to translate the Group’s overseas operations
were as follows:
2023
£:€
2022
£:€
Average 1.15 1.18
Year end 1.14 1.19
Going concern
Having considered the Group’s current trading, cash flow generation and debt maturity
including severe but plausible stress testing scenarios (as detailed further in the notes to the
financial statements) the Directors have concluded that it is appropriate to prepare the
Group financial statements on a going concern basis.
Philip Vincent
Chief Financial Officer
38
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Annual Report and Accounts 2023
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Corporate
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GAAP reconciliation
Consolidated income statement reconciliation
Year ended 30 April
Footnote
below
Statutory
2023
£m
Adjustments
2023
£m
Underlying
2023
£m
Statutory
2022
£m
Adjustments
2022
£m
Underlying
2022
£m
Revenue (a) 1,489.7 (152.8) 1,336.9 1,243.6 (149.9) 1,093.6
Cost of sales (b) (1,054.1) 106.3 (947.8) (8 97. 3 ) 149.9 (747. 4)
Gross profit 435.6 (46.5) 389.1 346.2 – 346.2
Administrative expenses (c) (236.1) 33.7 (202.4) (199.7) 17. 5 (182.2)
Operating profit 199.5 (12.8) 186.7 146.5 17. 5 164.0
Income from associates 2.5 – 2.5 3.9 – 3.9
Gain on bargain purchase (d) – – – 0.4 (0.4) –
EBIT 202.0 (12.8) 189.2 150.8 17.1 167.9
Finance income 0.1 – 0.1 – – –
Finance costs (e) (23.4) – (23.4) (18.1) 1.5 (16.6)
Profit before taxation 178.7 (12.8) 165.9 132.7 18.6 151.3
Taxation (f) (39.5) 1.9 (37.6) (31.1) 4.9 (26.3)
Profit for the year 139.2 (10.9) 128.3 101.5 23.5 125.0
Shares for EPS calculation (Note 11) 230.8m 230.8m 246.0m 246.0m
Basic EPS 60.3p 55.6p 41.3p 50.8p
Footnotes
Adjustments comprise:
Revenue: sale of vehicles (a) (152.8) (149.9)
Cost of sales: revenue sale of vehicles net down (a) 152.8 149.9
Depreciation adjustment (Note 28) (46.5) –
Cost of sales (b) 106.3 149.9
Gross profit (a)+(b) (46.5) –
Exceptional items (Note 28) 13.5 (2.3)
Amortisation of acquired intangible assets (Note 28) 20.2 19. 8
Administrative expenses (c) 33.7 17. 5
Gain on bargain purchase (d) – (0.4)
Adjustments to EBIT (12.8) 17.1
Exceptional finance costs (Note 28) (e) – 1.5
Adjustments to PBT (12.8) 18.6
Tax on exceptional items (Note 28) (2.1) 0.2
Other tax adjustments 4.0 4.7
Tax adjustments (f) 1.9 4.9
Adjustments to profit (10.9) 23.5
39
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GAAP reconciliation continued
Cash Flow Reconciliation
Year ended 30 April
2023
£m
2022
£m
Underlying EBIT 189.2 167.9
Add back:
Depreciation of property, plant and equipment 175.1 197. 2
Depreciation adjustment not included in underlying EBIT 46.5 –
Loss on disposal of assets 0.2 0.6
Intangible amortisation included in underlying operating profit
(Note 28) 1.2 1.0
Underlying EBITDA 412.2 366.7
Net replacement capex (155.6) (106.7)
Lease principal payments
1
(65.1) (43.7)
Steady state cash generation 191.5 216.4
Exceptional items (excluding non-cash items) – (0.7)
Working capital and non-cash items (0.3) (33.5)
Growth capex (122.6) (108.6)
Taxation (36.6) ( 27. 4 )
Net operating cash 32.0 46.2
Distributions from associates 3.1 4.1
Interest and other financing costs (20.6) (30.0)
Acquisition of business net of cash acquired (10.0) (0.5)
Free cash flow 4.5 19. 8
Dividends paid (52.2) (43.9)
Purchase of treasury shares for share buyback program (53.0) (7. 5 )
Lease principal payments
2
65.1 43.7
Net cash (consumed) generated (35.6) 12.0
Reconciliation to cash flow statement:
Net (decrease) increase in cash and cash equivalents (3.9) 8.8
Add back:
Receipt of bank loans and other borrowings (96.8) (318.1)
Repayments of bank loans and other borrowings – 27 7. 6
Principal element of lease payments 65.1 43.7
Net cash (consumed) generated (35.6) 12.0
1 Lease principal payments are included so that steady state cash generation includes all maintenance capex
irrespective of funding method.
2 Lease principal payments are added back to reflect the movement on net debt.
Cash Flow Reconciliation
Year ended 30 April
2023
£m
2022
£m
Reconciliation of capital expenditure
Purchases of vehicles for hire 398.2 292.9
Proceeds from disposals of vehicles for hire (128.4) (128.8)
Proceeds from disposal of other property, plant and
equipment (0.7) (2.7)
Purchases of other property, plant and equipment 7.4 52.4
Purchases of intangible assets 1.8 1.4
Net capital expenditure 278.2 215.2
Net replacement capex
3
155.6 106.7
Growth capex
4
122.6 108.6
Net capital expenditure 278.2 215.2
3 Net replacement capex is total capex less growth capex.
4 Growth capex represents the cash consumed in order to grow the fleet or the cash that is generated if the fleet
size is reduced in periods of contraction (excluding leased fleet).
Northgate
UK&I
2023
£000
Northgate
Spain
2023
£000
Group
sub-total
2023
£000
Underlying operating profit
5
93,382 60,440 153,822
Exclude:
Vehicle disposal profits (37,746) (13,730) (51,476)
Rental profit 55,636 46,710 102,346
Divided by: Revenue: hire of vehicles
6
367,694 252,691 620,385
Rental margin 15.1% 18.5% 16.5%
Northgate
UK&I
2022
£000
Northgate
Spain
2022
£000
Group
sub-total
2022
£000
Underlying operating profit
5
97,957 43,888 141,845
Exclude:
Vehicle disposal profits (44,8 41) (5,267) (50,108)
Rental profit 5 3 ,116 38,621 91,737
Divided by: Revenue: hire of vehicles
6
346,619 220,555 567,174
Rental margin 15.3% 17. 5 % 16.2%
5 See Note 5 of the financial statements for reconciliation of segment underlying operating profit to Group
underlying operating profit.
6 Revenue: hire of vehicles including intersegment revenue (see Note 5 of the financial statements).
40
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Risk focus
The risks facing the Group continue to be
wide ranging, with both external and internal
factors providing a high level of uncertainty
across the year.
During the year, changes in the economic
environment, including pressures from
inflation and interest rates, challenged the
business model and increased the focus on
risk management in those areas and how
the Group responds to those issues whilst
protecting the interests of all stakeholders.
Challenges persisted around the availability
of new vehicles which constrains our growth
ambitions and requires us to be more agile
in how we manage fleet, operate with older
vehicles and maintain high levels of
customer service.
The Group Risk Committee meets formally on
a quarterly basis, with the risk management
process embedded across the Group and
the Board overseeing the work of that
committee. This enables risks to be identified
on a top down and bottom up basis with
appropriate management throughout the
Group. A description of principal Board
decisions made during the year is included
within the Section 172 statement on pages
72 to 76.
Identifying and managing risks
The Board and Executive Directors recognise
the importance of identifying and actively
monitoring the impact of strategic,
operational and financial risks.
The Board has overall responsibility for risk
management with a focus on determining
the nature and extent of exposure to the
principal and emerging risks the business
is willing to take in achieving its strategic
objectives. This includes reviewing the risk
appetite in each area of risk. The risk
appetite is assessed in the context of
our business model and the external
environment in which we operate.
The Board and Executive Directors oversee
the ongoing process for identifying,
evaluating and managing the significant risks
the Group faces. The Board is also responsible
for ensuring the appropriate risk management
process is in place and that it accords with
risk management guidance including a
three lines of defence approach. The Board
has performed a robust assessment of the
principal and emerging risks facing the
Group during the year.
Identifying and managing risk
The Group Risk Committee is executive-led,
is facilitated by the Group Head of Internal
Audit and includes senior management
from across the Group. It is responsible for
facilitating the identification of risks including
emerging risks and overseeing management
of those principal risks throughout the Group
in order to achieve our performance goals
within the context of risk appetite.
The Audit Committee on behalf of the Board
takes responsibility for overseeing the
effectiveness of internal control systems
which are embedded into our risk
management systems.
Ultimate responsibility for oversight of risk
management rests with the Board. The
Executive Directors assess top down risk
exposures against the context of the Group’s
strategy and the effective day to day
management of risk is embedded within
our operational business units and forms an
integral part of how we work. This bottom up
approach allows potential risks to be
identified at an early stage and escalated
as appropriate, with mitigations put in place
to manage such risks. Each business unit
maintains a comprehensive risk register.
Changes to the register are reviewed
quarterly by the Group Risk Committee,
with significant and emerging risks escalated
to the Board.
Our risk management
strategy supports our
ability to respond to the
changing needs of our
stakeholders and the
dynamics of the markets
we operate in. The
purpose of our risk
management strategy
is to identify risks which
could affect us achieving
our strategic objectives
and mitigate these to
an acceptable level.
Managing risks to
support our strategy
and stakeholders
41
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Redde Northgate plc
Annual Report and Accounts 2023
Group Internal Audit
• Monitors risk management
processes across the group through
overseeing the Group Risk
Committee
• Supports the Audit Committee in
evaluating risk exposures and
emerging risks
• Designs and implements a testing
programme of internal controls
Group Risk Committee
• Oversee and facilitate the process
of identifying recording and
monitoring risks on a bottom up
basis throughout the business units
and functions in a consistent
manner
• Ensure that risk owners are
allocated to all risks
• Aggregate risk information and
map against principal risks
ensuring escalation to Executive
and Board
• Ensure that top down and
emerging risks are managed
throughout the Group
Support functions
• Provide guidance to Group Risk Committee,
Regional executive teams and risk owners
• Identify and assess risks in support functions
• Allocate risk owners to all support function risks
Executives
• Define risk appetite
• Set Group strategy in context of risk
appetite and risk tolerance
• Identify and review principal risks
• Identify and monitor emerging risks
• Design and implement the risk
management framework
Regional executive teams
• Identify and assess risks in business operations
• Allocate risk owners to all risks
• Monitor risks and report to Risk Committee
• Ensure effective operation of internal controls
The Board
• Overall responsibility for risk management
• Reviews and approves risk appetite
• Monitors the activity of the Group Risk Committee and
agrees the risk programme
• Reviews principal and emerging risks with the Executive
Directors
Audit Committee
• Supports the Board in monitoring risk exposure and
ensuring that internal controls embedded in the business
are relevant and proportionate to risk appetite and
exposure
• Reviews internal controls
• Sets the objectives of and monitors the work of Group
Internal Audit
Identifying and managing risk continued
There is a formal governance structure
underpinning our approach to risk
management. The Group ensures that
there are robust processes in place in order
to achieve effective risk management. This
involves the identification, evaluation, control
and continuous monitoring of risk posed to
the business. These processes ensure that
we have appropriate measures to manage
our exposure to risk in order to operate within
the Group’s risk appetite.
Risk
management
framework
Top down
Oversight, identification, assessment and mitigation of risk at a Group level
Bottom up
Identification, assessment and mitigation of risk at business unit and functional level
First line of defence Second line of defence Third line of defence
Governance
Risk
ownership
Risk management
42
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Identifying and managing risk continued
The Board is responsible for overseeing
the risk appetite of the Group. Executive
Directors set the risk appetite of the Group
based on the level of risk that the Group is
willing to take in order to deliver against
strategic, operational and financial
objectives.
The risk appetite processes ensure that risks
are consistently managed across the Group
with decisions being made accepting the
right level of risk, and that the appropriate
resources and controls are put in place at
each level of risk. It also ensures that risks are
escalated appropriately and proportionately
in line with overall appetite.
Risk appetite category Averse Minimal Cautious Open Positive
Financial
Operational disruption
Legal & regulatory
Health & safety
Environment
Reputation
Strategic
Strategic
Strategic
Operational
Operational
Operational
Underlying
Underlying
Underlying
Risk appetite
category
Risk
tolerance Explanation
Averse Very low Activities undertaken will only be those considered to carry
very low or virtually no residual risk.
Minimal Low Activities will only be undertaken where they have a low degree
of residual risk.
Preference for very safe business delivery with the potential for
benefit or higher return not a key driver.
Cautious Medium Activities undertaken may carry a high degree of inherent risk
that is deemed controllable to a large extent so that the residual
risk is medium.
Willing to tolerate a degree of risk in selecting which activities
to undertake to achieve key deliverables or initiatives, where
we have identified scope to achieve significant benefit or realise
an opportunity.
Open High Activities themselves may potentially carry, or contribute to,
a high degree of residual risk.
Willing to consider wider range of options and choose one
most likely to result in successful delivery while providing
an acceptable level of benefit. Seek to achieve a balance
between a high likelihood of successful delivery and a high
degree of benefit and value for money.
Positive Very high Willing to be innovative and to consider opportunities offering
higher business rewards despite elevated levels of inherent risk
even if those activities carry a very high residual risk.
Risk appetite
1. Describe potential impacts
Risk appetite is assessed for potential impacts
across different impact categories:
• Financial risk
• Operational disruption
• Legal and regulatory compliance
• Health and safety
• Environment
• Reputational risks: considered separately
across each identified stakeholder group
2. Set acceptable risk level
Potential impacts are assessed against a
combination of likelihood and risk impact
with the overall outcome being categorised
as risk averse, neutral or risk aware.
An example of an area of risk averse
tolerance would be our approach towards
seeking to comply with all relevant laws
and regulations.
An example of where the Group has an
open or positive tolerance to risk would be
in seeking strategic growth opportunities
including acquisitions which may require
accepting a higher level of risk in order
to achieve returns against our strategic
objectives.
3. Compare risk assessment
Risk appetite will vary across different types
of risk, and therefore appetite is further
analysed between underlying, operational
and strategic risks where tolerance for
accepting risk will vary.
4. Determine action
Principal risks including inherent and
mitigated risk are measured against the risk
appetite framework to ensure that they are
within tolerance of overall risk appetite. If
principal risks are outside or towards the top
end of risk appetite tolerance, actions will
be taken including taking mitigating actions
or increasing oversight or controls. If risks are
below the risk appetite tolerance level then
action should be taken to consider being
more open towards risk in order to facilitate
achievement of our strategic objectives
including higher returns or growth.
The risk appetite process is explained as follows:
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Redde Northgate plc
Annual Report and Accounts 2023
Recognising that all business activity involves
elements of risk, the Group maintains a policy
of continuously identifying and reviewing risks
that represent a threat to the business, or that
may cause future financial results to differ
materially from expected results. Our
approach is not intended to eliminate risk
entirely, but to manage our risk exposures
across the business, whilst at the same time
making the most of our opportunities.
The Directors have carried out a robust
assessment of the principal and emerging
risks facing the Company, including those
that would threaten its business model, future
performance, solvency or liquidity. For each
risk we state what it means for us and what
we are doing to manage it. The change in risk
is assessed using the aggregation of bottom
up risks which have been mapped against
principal risks and also the top level and
emerging risks. The risk level change
represents the assessed risk exposure as at
30 April 2023 compared to the same point
in the previous year.
The Board is dedicated to ensuring the Group
operates in a responsible and sustainable
manner, and throughout the year we have
developed and approved our ESG strategy,
formed a separate ESG Committee and our
maiden Sustainability Report was published
during the year. Further informaiton on our
ESG strategy can be found on pages 52 to 70.
While we view climate change as a significant
risk for the business, we believe it is more
appropriately addressed not as an individual
principal risk, but within a number of our
underlying risk categories for any near-term
impacts; and then separately through our
TCFD risk assessment for its longer-term
implications, as set out on pages 64 to 70.
This better reflects both risks and opportunities
which will arise, including the energy transition
in our sector over the longer-term.
The risks specified are not intended to
represent an exhaustive list of all potential
risks and uncertainties. The risk factors
outlined should be considered in conjunction
with the Group’s system for managing risk,
described on pages 40 to 41 and in the
Corporate Governance Report on pages
77 to 129.
Identifying and managing risks
The Board maintains a focus on effective
risk management, which flows all the way
through the organisation. The risk appetite is
set at different tolerances depending on the
impact categories as mentioned previously.
The culture of the organisation is consistent
with risk appetite and ensures all activities,
from day to day operations to high level
strategic decisions, are performed in line
with this approach.
The assessment of principal risks is based on
the perceived impact on the Group’s ability
to achieve its strategic objectives and the
likelihood of their occurrence taking into
account controls that have been put into
place to mitigate any impact.
In addition to the principal risks, the Board
also considers what emerging risks may also
impact the Group. The Group considers an
emerging risk to be one that is not currently
having a material impact on the business but
has the potential to impact future strategy or
operations. The Group’s approach to
managing emerging risk exposure is to:
• identify potential emerging risks, using
horizon scanning techniques; published
external research and peer or competitor
review;
• assess these risks taking into account
our industry sector and market position,
and our strategy, to determine relevance;
• consider the potential impact of each
risk on the Group’s strategy, finances,
operations and reputation, taking into
account the likelihood of the risk occurring
and the speed with which it may manifest;
and
• regularly monitor these risks and develop
actions to address them where
appropriate.
The Board considers climate-related matters,
including the recommendations from the
TCFD as emerging risks. Our assessment
around this area has developed significantly
during the year but it is still considered to be
an emerging risk to the Group and will be
continually monitored. As those risks become
prevalent, they will be integrated into the
assessment of principal risks and the overall
risk management framework of the Group.
Identifying and managing risk continued
Identifying and managing risks
Principal risks
Emerging risks
44
Redde Northgate plc
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Principal risks and uncertainties
Our risk assessment
The Group risk register records 30 risks in total
which have been allocated against the six
risk appetite categories (see page 42) and
mapped to eight individual principal risks
which are categorised into strategic, financial
and operational risks although most risks
have an impact across all three categories.
Impact
Very high
Likelihood
Very highVery low
Very low
4
Inherent risk
Residual risk (unchanged from
prior year
Residual risk (risk scoring increased
from prior year)
Residual risk (risk scoring reduced from
prior year)
1
Economic environment
2
Market risk
3
Vehicle supply
4
The employee environment
5
Legal and compliance
6
IT systems
7
Recovery of contract assets
8
Access to capital
3
Key
Risks
Risk appetite Averse Minimal Cautious Open Positive
2
4
8
7
3 1
6
5
6
1
2
5
8
7
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Principal risks and uncertainties continued
Risk trend
Type
of risk Risk
Appetite
tolerance
Mitigated
risk
Risk
trend
Change
explanation
Strategic
risks
1
Economic
environment
Cautious
to open
• Demand for our rental services remains high, above the level of new vehicle supply
• Volumes have continued to grow in Redde following recovery from COVID-19 period
• Inflationary pressures have been experienced during the year but have been managed against
the cost base and through pricing
2
Market risk
Minimal
to open
• No major customer losses and the customer base continues to be diversified across sectors with
no reliance on individual customers of size
• The opportunities and services created through further of our integrated mobilities platform
improves the attractiveness of our offering and the retention of customers
• We continue to build a platform and relationships that will facilitate the transition away from
non-ICE vehicles for the Group and its customers
Operational
risks
3
Vehicle supply
Minimal
to Open
• The flexibility in our fleet model has enabled us to age out the fleet during a period of low
availability of supply. However, the older age is now reducing the ability to significantly further
age the fleet without impacting operational performance or customer service, and may restrict
growth opportunities
• Supply issues also put pressure on new vehicle inflation but there are indications that the global
supply of vehicles will improve going forward
• We expect residual values to reduce from the high levels experienced since COVID-19
4
The employee
environment
Averse
to Open
• Improved employee engagement scoring reflects the measures taken to improve
communication, training and development of our people.
• Widening of benefits including free shares, employee allowances and cost-of-living support has
reduced attrition risk
• Improved routes to employee markets through further developing in-house recruitment and
vacancy filler platform used across the Group
5
Legal and
compliance
Averse • No material changes to laws and regulations
• No material changes to contractual obligations
• Horizon scanning and planning for future changes to laws and regulations
6
IT systems
Minimal
to Open
• Continued investment in and integration of IT platforms as the group grows organically and
inorganically
Financial
risks
7
Recovery
of contract assets
Cautious
to Open
• Cash collection has improved with statutory debtor days in Redde reducing
• Insurance environment remains stable in order to facilitate collection of claims
8
Access to capital
Cautious
to Open
• Debt facilities remain adequate for funding Group strategic objectives
• One year extension of bank facilities in the year has maintained the maturing profile of debt
Risk trend
Evaluation is defined as management’s
assessment of whether the risk factor has:
Increased
Decreased
Not changed
Mitigated risk
within appetite tolerance
outside of appetite tolerance
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Strategic risks
Risk description
A change in economic activity in the
countries that the Group operates or are
linked through the supply chain could
affect the demand for our products and
services, increase risk of customer failure,
interrupt supply chains or increase the
cost base of the business.
Influencing factors
• Changes in economic conditions
including economic growth forecasts
and inflationary pressures
• Influences of conflicts between
countries on global supply chains
• Changes to driving patterns and vehicle
usage could influence demand for
insurance related services
Controls and mitigating activities
• Flexibility over asset management
means that in the event of a downturn
the Group can generate cash and
reduce debt by reducing vehicle
purchases or accelerating disposals
• The business model supports high levels
of utilisation and vehicles returned from
customers are redeployed within the
fleet
• The cost base related to management
of insurance claims and services is
flexible and can be scaled back in
response to a downturn in revenue
• The Group maintains close relationships
with key suppliers to ensure continuity of
supply, such as negotiations considering
the global restriction of vehicle
availability, and has diversified supplier
base in order to further mitigate this.
In the event of short term supply
interruption, the fleet can be aged
• Pricing structures remain under review
in context of cost inflation in order to
protect margins
• Credit risk of new and existing customers
is continually assessed and actions
taken where necessary. The Group has
a diversified customer base without
overreliance on an individual or group
of customers across any sector
• Transactional foreign exchange
exposure is minimised through sourcing
supplies in the same currency as the
revenue is generated
1
Economic environment
Risk
trend
2
Market risk
Risk
trend
Risk description
The loss of a major customer or key
insurance referral partner could adversely
impact the Group’s revenues. Without any
adjustment to pricing, service or cost base,
this will result in lower returns. There is a risk
that demand for the Group’s products
could materially diminish if it fails to
respond to behavioural, structural, legal
or technological changes in the markets
in which it operates.
Influencing factors
• Level of competition across vehicle
rental and leasing sectors is broad with
low barriers to entry
• Price competition could impact the
Group’s ability to attract and retain
customers at appropriate rates of return
• Increases in insurance referral rates or
inability to pass on cost increases
through claims could impact viability
of returns
• Loss of a major customer or insurance
referral partner could diminish returns
if the cost base is not managed
appropriately
• Changes to usage of fleet such as
regulations around operation of ICE
vehicles and low emission zones will
change the demand for existing
products and services
• Structural changes to the rental and
insurance and legal services markets
such as consolidation, digitalisation
or vertical integration could impact
on the viability of the business model
Controls and mitigating activities
• Comprehensive suite of products and
services improves retention of existing
customers and attractiveness to new
customers by differentiating our offer
from other providers
• Minimising the concentration of business
customers
• Maintaining contracts and long term
relationships with insurance partners
• Continual benchmarking of pricing and
service offer compared to competitors
and other market participants
• Pricing controls over target levels of
returns and discount authorities
• Continued evolution of the fleet towards
non-ICE vehicles with development of
supplier relationships and investments
in supporting infrastructure
• Pricing structures remain under review i
n context of cost inflation in order to
protect margins
• Credit risk of new and existing customers
is continually assessed and actions
taken where necessary. The Group has
a diversified customer base without
overreliance on an individual or group
of customers across any sector
• Transactional foreign exchange
exposure is minimised through sourcing
supplies in the same currency as the
revenue is generated
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3
Vehicle supply
Risk
trend
4
The employee environment
Risk
trend
Principal risks and uncertainties continued
Operational risks
Risk description
Failure to secure sufficient access to new
vehicles at appropriate pricing would
impact on ability to grow, operational
and customer service delivery, and
overall returns.
An increase in holding costs either through
higher new vehicle pricing or lower
residual values, if not recovered through
hire rate increases or operational
efficiencies, would adversely affect
returns.
Influencing factors
• Challenges around global vehicle
supply as a result of COVID-19 and
global conflict in Ukraine have
impacted new vehicle supply and put
pressure on new vehicle pricing
• Residual values remain uncertain during
this period of vehicle supply and are
also influenced by economic conditions
Controls and mitigating activities
• Flexibility over asset management
means that in the event of a downturn
the Group can generate cash and
reduce debt by reducing vehicle
purchases or accelerating disposals
• The business model supports high levels
of utilisation and vehicles returned from
customers are redeployed within the
fleet
• The Group maintains close relationships
with key suppliers to ensure continuity of
supply, such as negotiations considering
the global restriction of vehicle
availability, and has diversified the
supplier base in order to further mitigate
this. In the event of short term supply
interruption, the fleet can be aged
• Pricing structures remain under review
in context of cost inflation in order to
protect margins
• Transactional foreign exchange
exposure is minimised through sourcing
supplies in the same currency as the
revenue is generated
Risk description
Failure to attract, retain, develop and
motivate the right talent will impede the
successful operation of the business model
and delivery of the Group’s strategic
objectives.
Failure to keep employees safe through
health and safety risk management will
impact trust with our employees and
reputation across all stakeholders.
Influencing factors
• External pressures in the labour market
creates issues in attracting and retaining
talent and therefore delivery of the
operating model and commercial
proposition
• The diverse operations of a Group
growing organically and inorganically
across a wide geographical area
increases the challenge of fostering
a shared culture in line with strategic
objectives
• Not safeguarding employees’ health
and welfare and failure to invest in our
workforce will lead to high levels of staff
turnover, which will affect customer
service, operational efficiency and
overall delivery of the Group’s strategy
Controls and mitigating activities
• Employee engagement with Group
management through the Employee
Engagement Forum and employee
surveys
• Internal communications establish vision
and values which are aligned to Group
strategy and we undertake regular
communication of the strategic
progress through various platforms
• Ongoing benchmarking of reward
and benefits against the comparable
market
• Regular performance reviews including
personal development and tailored
training
• Regular engagement with employees
and access to health and wellbeing
initiatives
• Widening of rewards and benefits
including share ownership, cost-of-living
support and improved annual and
family leave
• Group health and safety team develops
policy and processes to ensure safe
working practices and monitors
compliance with those policies
• Continual development of Group
health and safety initiatives to promote
an ongoing safe working environment
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Principal risks and uncertainties continued
Operational risks
Risk description
Certain activities and arrangements
within the Group are regulated, therefore
ongoing compliance with regulations is
required to ensure continuity of business.
Legal cases relating to the provision of
credit hire and insurance related services
have provided a precedent framework
which has remained stable for several
years. Legal challenges or changes in
legislation could undermine this framework
with consequences for the markets in
which the Group operates.
Influencing factors
• Changes to the legislation underlying
one or more of the Group’s core
markets could impact revenue and
profitability, particularly within the
credit hire, insurance and legal services
businesses
• Inadequate operation of systems to
monitor and ensure compliance with
regulation could expose the Group
to fines and penalties or operating
licences could be suspended and
also adversely impact our reputation
across all stakeholder groups
Controls and mitigating activities
• In-house legal and compliance team
continuously monitoring regulatory
and legal compliance
• Horizon scanning and monitoring of
legal and regulatory developments
• Policies and procedures and
compliance monitoring programmes
• Training in relation to relevant legislation,
regulatory responsibilities and Company
policies and procedures
• External advisors are retained where
necessary
Risk description
Failure of existing systems, lack of
development in new systems or poor
integration of new systems, could result in a
loss of commercial agility and/or harm the
efficiency and continuity of our operations.
Incorrectly handling data, or unsuccessfully
defending against data theft or cyber-
attacks, could cause significant
reputational harm across all stakeholders.
Influencing factors
• The Group’s business is dependent on
the safe and efficient processing of a
large number of complex transactions
and stakeholder interactions. The
effective performance and availability
of core systems is central to the
operation of the business
• Inadequate IT systems can be at risk
from failed processes, systems or
infrastructure and from error, fraud or
cyber-crime
• Growth through inorganic acquisitions
increases the complexity and diversity
of operations, IT systems and
infrastructure
Controls and mitigating activities
• Investments in key IT platforms and
systems to ensure continued
operational performance and delivery
• Ongoing monitoring of the continuity of
IT systems with access to support where
required
• Back-up and recovery procedures for
key systems including disaster recovery
plans
• Operation of information security and
data protection protocols to ensure that
data is held securely, and is adequately
protected from cyber-attacks or other
unauthorised access
• Changes to key IT systems are
considered as part of wider Group
change programmes and are
implemented in phases where possible
with appropriate governance structures
put in place to oversee progress against
project objectives
5
Legal and compliance
Risk
trend
6
IT systems
Risk
trend
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Principal risks and uncertainties continued
Financial risks
Risk description
Our credit hire and repair business involves
the provision of goods and services on
credit. The Group receives payment for the
goods and services it has provided after
a claim has been pursued against the
party at fault (and the relevant third party
insurer). This can mean that the Group
can endure a long period before some
payments are received.
Influencing factors
• Recovery of insurance claims requires
the orderly running of insurance markets
with claims being settled on commonly
agreed terms
• Due to the relative strength of insurance
companies, they could influence the
speed of settlement of claims in order
to secure better terms
• Settlement of claims is normally
reached through mutual agreement.
Settlement through court arbitrations
can be lengthy and relies on efficient
operation of the court process
Controls and mitigating activities
• Services are only provided to customers
after a full risk assessment process to
ensure that the claim will be legally
recoverable from a third party
• The Group manages collection risk
by standardising terms with third party
insurers (protocol agreements) where
possible, ensuring that in addition, any
payment delays are monitored and
appropriate action taken to facilitate
prompt settlement
Risk description
The Group needs access to sufficient
capital to maintain and grow the fleet
and fund short term working capital
requirements.
Investors increasingly require businesses to
demonstrate that they act in a responsible
and sustainable manner prior to granting
access to financing facilities.
Influencing factors
• Debt markets can be volatile in terms
of liquidity and pricing
• Failure to maintain or extend access
to credit and fleet finance facilities or
non-compliance with debt covenants
could affect the Group’s ability to
achieve its strategic objectives or
continue as a going concern
Controls and mitigating activities
• Debt facilities are diversified across a
range of lenders and close relationships
are maintained with key funders of the
Group to ensure continuity of funding
• Debt facilities have been put in place
to provide adequate headroom and
maturities in order to support the
strategy of the Group
• The Group continually monitors cash
flow forecasts to ensure adequate
headroom on facilities and ongoing
compliance with debt covenants
• The Group maintains leverage within
stated policy and the business model
allows cash to be generated through
economic cycles
• The impact of access to capital on the
Group’s viability is considered in the
viability statement on pages 50 to 51
7
Recovery of contract assets
Risk
trend
8
Access to capital
Risk
trend
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Viability statement
Effectively leveraging
integrated mobility
capabilities with significant
new business wins and
service diversification aligned
to our ESG framework
strongly positions the Group
for future growth.
Assessment of prospects
Our business model and strategy are central
to understanding the prospects of the Group,
details of which can be found on pages 8 to
19. The Group’s current overall strategy has
been in place for several years, subject to
the ongoing monitoring and development
described below. The Group is well
established within the markets it operates in,
details of which can be found on pages 12 to
15, and has proven resilience through difficult
economic conditions in recent years and
strong momentum has continued throughout
the year ended 30 April 2023.
The Board continues to take a measured
approach to strategic risk; the Group has
matured through the Focus, Drive and
Broaden elements of its strategy, building
platform for the next phase of our strategy.
It has achieved significant contract wins
through an enhanced commercial offering,
and diversified service, such as through the
acquisition of Blakedale, whilst exploring
further market and geographic growth
opportunities intended to add long term
value to the Group. The Board continually
assesses the changes in the risk profile and
emerging risks to the Group, further details
of which can be found of pages 40 to 49.
The Group pursues only those activities
which are acceptable in the context of
the risk appetite of the Group as a whole.
The plan makes certain assumptions about
the normal level of capital recycling likely
to occur and therefore considers whether
additional financing will be required.
The first year of the financial forecast forms
the Group’s operating budget. Subsequent
years are forecast from this year, based
on historical experience and expected
measures within the overall strategic plan.
Based upon this assessment, the Directors
have a reasonable expectation that the
Group will be able to continue in operation
and meet its liabilities as they fall due over
the period to 30 April 2026.
Assessment of viability
To assess the Group’s viability, the three year
strategic plan was stress tested against
various scenarios and other sensitivities.
Sensitivity analysis of our strategy
A detailed three year strategic review was
conducted which considers the Group’s
cash flows, dividend cover assuming
operation of stated policy, and headroom
against borrowing facilities and financial
covenants under the Group’s existing
facilities. These metrics were subjected to
sensitivity analysis to assess the Group’s
ability to deliver its strategic objectives.
Financial position
The maturity of the Group’s £475m principal
banking facility was extended during the
year and has a maturity date of November
2026. Private placement loan notes of €375m
give a longer profile of maturities spread
across 6, 8 and 10 years. Headroom against
the Group’s existing banking facilities at
30 April 2023 was £290m as detailed on page
36. This compares with headroom of £382m
at 30 April 2022 and reflects the ongoing
investment in fleet for growth. Given the
financial strength of the Group, we do not
The assessment process
and key assumptions
The Group’s prospects are assessed through
its strategic planning process. This process
includes an annual review of the ongoing
strategic plan, led by the CEO, together
with the involvement of business functions
in all territories. The Board engages closely
with executive management throughout
this process and challenges delivery of
the strategic plan during regular Board
meetings. Part of the Board’s role is to
challenge the plan to ensure it is robust
and makes due consideration of the
appropriate external environment.
The Directors have assessed the viability
of the Group over a three year period to
30 April 2026, considering the Group’s current
position and a robust assessment of the
potential impact of the principal risks
documented in the Strategic Report.
The three year period was selected as this
represents the normal investment cycle of
the Group. With the exception of minimum
term rental contracts, there is no fixed period
over which revenue is contracted, in line with
the flexibility offered to customers. Within the
rental business, vehicles are normally held
for up to five years, with an average holding
period of three years. Within the insurance
claims and services business, there is no
fixed investment cycle. The viability of the
business is underpinned by its commercial
relationships with insurance partners.
Commercial terms are continuously reviewed
with insurance partners, with three years
representing an average review cycle of
material terms. The three year period used
for assessing viability is therefore aligned
to how capital is employed in the business,
the maturity of key commercial relationships
and, therefore, how returns on investment
are reviewed.
anticipate any material deterioration in
the credit status of the Group or access to
credit markets that would contradict this
assumption.
Taking this into account, the Group’s facilities
provide sufficient headroom to fund the
capital expenditure and working capital
requirements during the planned period.
The Directors have further considered the
resilience of the Group, considering its
current position and the principal risks facing
the business. The plan was stress tested for
severe but plausible scenarios over the
planned period as follows:
• No further growth in vehicles on hire with
rental customers
• A 2% reduction in pricing of rental hire
rates
• A 2% increase above plan assumptions in
the purchase cost of vehicles and other
operating expenses not passed on to
customers
• A 5% reduction to assumptions in the plan
for the residual value of used vehicles
• A 10% volume reduction in insurance
claims and services revenue in
aggregate, either through lower demand
or through ending the commercial
relationship with a group of key insurance
partners
• A 1% increase in floating interest rates
above what was included within the plan
• An increase of 50 days in the time taken
to settle outstanding claims with insurers
Revenues from insurance claims and services
are closely linked to the volume and density
of traffic on the roads which in recent years
was impacted by COVID-19 lockdowns.
Volumes have now recovered to a
normalised level. Over the COVID-19 period
overall profitability and cash generation of
the Group increased due to the resilience
of the business model. The strategic plan
therefore does not assume further lockdowns
will occur. The resilience of the Group shown
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through previous lockdowns gives us
confidence that we would be well prepared
should this eventuality occur again.
The above scenarios took into account
the effectiveness of mitigating actions
that would be reasonably taken, such as
reducing variable costs that are directly
related to revenue, but did not take into
account further management actions that
would likely be taken, such as a change to
the indirect cost base of the Group or a
reduction in capital expenditure and ageing
out of the vehicle fleet, both of which would
generate cash and reduce debt.
Conclusions relating to
viability and going concern
After considering the above sensitivities
and reasonable mitigating actions, sufficient
headroom remained against available debt
facilities and the covenants attached to
those facilities. The Directors have a
reasonable expectation that the Group will
continue to be able to meet its obligations as
they fall due and continue to be viable over
the period to 30 April 2026. The Directors also
considered it appropriate to prepare the
financial statements on the going concern
basis, as explained in the Basis of preparation
paragraph in Note 2 of the Financial
Statements.
Viability statement continued
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Sustainability
Sustainable
mobility solutions,
delivered responsibly
Pillar Governance Forum Countries
CEO and management
responsibility
The CEO has ultimate responsibility for
climate change considerations and
mitigating actions, with day to day
management delegated to the Group
Management Boards, comprising business
and function heads. The CFO is responsible
for the TCFD programme and development
of relevant KPIs and net zero strategy.
Executive functions with oversight and
responsibility for other ESG matters include
the Head of ESG, the Head of Group Safety
and Environment in the UK and the Director
of Development and Sustainability in Spain.
Sustainability Committee
We formed our first Sustainability Committee
this year which is chaired by the CFO and
supported by our new Head of ESG. The
Committee is made up of senior
representatives from across the organisation.
The Chair of the Committee acts as a direct
link between the Committee and the Board
in the delivery of the sustainability
programme. The expectation is that the
Committee will:
• Evaluate the material issues that impact
on our ability to create economic,
environmental and social value
Our sustainability approach
Over the past year we have significantly
enhanced our capabilities and
understanding of ESG matters and our
environmental footprint.
Over the following pages we set out some
of the key elements of this work, which will
be complemented by the publication of
our second Sustainability Report to be
published shortly after this report.
• Review the approaches adopted to
systematically address material risks and
opportunities and propose alternative
programmes of activity, to improve social
and environmental performance
• Evaluate the degree of progress being
made to achieve stated commitments,
targets and positive sustainability outcomes.
To support the Committee, we have
established four sub-groups to address
material social and environmental
sustainability issues. The activities of the
sub-groups encompass all territories and
business operations.
The membership of these groups has been
taken from functional teams and operational
representatives, all of whom are tasked
with proposing to the Committee the most
appropriate actions we should be taking
to deliver against our targets.
Key actions undertaken
in FY2023 have included:
• Formation of Sustainability
Committee and working groups
• Setting of Scope 1 and Scope 2
targets
• First year of Scope 3 emissions
measurement
• Enhanced TCFD reporting including
physical risk assessment
• Public CDP reporting
• Enhanced employee benefits
and rewards
Governance
Sustainability
Committee
Facilities and Behaviour Group
Facilities and Social Impact Group
Social Impact Group
Data and Mobility Group
Impact
Experience
Transition
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Sustainability continued
Commitment
We minimise our impact on the environment and
positively influence our surrounding communities;
supporting innovation in our industry.
Areas of key focus
• GHG emissions and targets
• Waste and resource efficiency
• Community investment
Impact
Experience Transition
Commitment
Maintaining high levels of integrity,
transparency and good governance
Areas of key focus
• Sustainability Committee
• Climate disclosure and risk
• Management systems
Commitment
We empower our people giving them the right tools
to deliver industry leading customer experience
Areas of key focus
• Health and safety
• Training and development
• Engagement and reward
Commitment
Driving the transition to non-ICE vehicles and to
embrace the opportunity to tackle climate change
Areas of key focus
• Low carbon mobility solutions
• Capability and infrastructure
• Industry participation
Governance
Society
Industry
Our focus areas
Creating
sustainable
value
People and approach
Impact and outcomes
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Sustainability continued
2023 2022
Male Female Total Male Female Total
UK and Ireland 4,055 2,068 6,123 3,717 1,80 8 5,525
Spain 846 411 1,257 808 397 1,205
Total 4,901 2,479 7,3 8 0 4,525 2,205 6,730
The gender split at senior manager level
2023 2022
Male Female Total Male Female Total
Directors 5 3 8 6 1 7
Senior Managers 32 15 47 17 5 22
The Group has expanded the definition of senior management level in FY2023, the 2022 headcounts have not been
adjusted to reflect this new categorisation.
Governance
Ethics, anti-corruption and
compliance
We have policies in place covering financial
and corporate governance. Our Code of
Business Conduct, applicable to all
employees of Redde Northgate, sets out our
ethical standards and guidance on behaving
responsibly. This code and our statement of
compliance with the Modern Slavery Act 2015
are contained on our website. Compliance
training is conducted and tracked through
our e-learning platform. The Group has a
formal whistleblowing policy and procedures
ensuring every employee can have a voice
and a means to raise concerns to the Group.
The Chairman of the Audit Committee holds
ultimate responsibility for managing any
complaints; in FY2023, no matters were
identified as sufficiently material to be
escalated for their attention.
Supply chain management
We have a significant number of suppliers and
partners across the Group who are an integral
part of our business and value chain. We seek
to treat all of our suppliers responsibly and
ensure fair engagement practices and
payment terms. We actively engage with
suppliers to ensure compliance with our code
of conduct, which includes provisions on
human rights and environmental standards.
Our procurement capabilities and expertise
are being enhanced at Group level, working
closely with each of the businesses to
standardise practices and policies; including
the onboarding of new suppliers who must
sign and comply with our ethical trading
statement, covering modern slavery, bribery
and corruption.
Cybersecurity and data privacy
All employees must complete information
security training, and we set a number of
rules and procedures in our contact centres
to mitigate particular risks. Our IT function
works closely with the business change
teams across the Group to assess the
proposed and developing projects and
ensure best practice is adhered to. We
conduct vulnerability scanning, have rolling
penetration testing scheduled across all the
businesses in the Group for external facing
systems, and conduct penetration testing for
any new external system developments
before they go live. Our information security
management system identifies the security
and policy controls and ensures the
necessary audits are undertaken to
evidence our compliance.
Workforce composition
The composition of our workforce and
senior management as at 30 April 2023 is set
out below. A review of our Board composition
and diversity is contained in the Corporate
Governance report set out on pages 80 to 85.
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Sustainability continued
Challenge Opportunity
Materiality assessment
Impact on operations and financial performance Material issues Impact on the environment and society
High Low Low High
Environment
Investment into EV infrastructure and solutions Climate change and action Driving emission reductions across the value chain
Low carbon mobility market growth
Low to zero carbon mobility Providing low carbon mobility for all
Exposure to rising material and parts costs
Materials and parts Reducing material yield variance and increasing green
part usage
Exposure to landfill tax and hazardous waste costs
Waste, spent oils and packaging Reprocessing spent oil and diverting waste from landfill
Exposure to rising electricity and water costs
Electricity and water usage Reducing consumption through efficiency measures
Exposure to rising gas and fuel costs and taxes
Gas and fuel consumption Increasing electrification of heat and transport
Social
The financial and reputational impact of accidents Health and Safety Protecting the safety of our people and customers
Improving mental health and enhancing resilience
Wellbeing Caring for and supporting our people
Recruitment pool and skill shortages
Social mobility and diversity Reducing inequality and barriers to opportunity
Productivity loss and customer dissatisfaction
Technical skills and knowledge Increasing technical skills and carbon literacy to enhance
customer value proposition
Employee turnover and replacement costs
Development, recognition and reward Increasing employee motivation and satisfaction
Forging alliances with local groups
and attracting talent
Community and
local enterprise mobility
Building trust and supporting SMEs
Governance
Customer satisfaction and sales volumes Customer experience and support Enhancing quality and service to customers
Informing government policy and regulation
Industry participation Driving forward industry collaboration and innovation
Non-compliance risks and ethical breaches
Ethics and compliance Responsible business practices
Efficient and effective end to end logistics
Vehicle procurement and supply chain Working with OEMs to drive sustainable outcomes
Exposure to legal and regulatory risks
Corporate governance and
remuneration
Linking ESG performance to executive remuneration
Double materiality assessment
Last year we engaged with our stakeholders to inform them of the development of our first materiality assessment. We used
this enhanced understanding of stakeholder interest, coupled with an evaluation of financial impact to formulate a double
materiality assessment. This approach considers what is material to us and what is material to society and/or the planet.
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Sustainability continued
Safe, secure and healthy
We provide a secure and safe working
environment for our people and stakeholders.
We monitor our accident frequency rate
(AFR) and other performance metrics in
health and safety very closely. This year our
AFR was 1.8 which is a slight increase on the
prior year AFR of 1.7.
An increase in the volume of activity across
our workshop and body shops, which are
more hazardous in nature than our
administration centres, is likely to have
contributed to this increase. Nevertheless,
we have undertaken an analysis of incidents
during this period.
We care about the physical and mental
health of our people and have a preventative
system-wide approach to health and
wellbeing where we all take collective
responsibility for wellness. In support of this
approach, we launched our Wellbeing
Strategy which sets out how we hope to keep
everyone in our business physically, mentally,
and financially well. The deployment of this
strategy was underpinned by a broad
programme of wellbeing events, training
and support tools.
Employee assistance programme
We have invested in support tools, initiatives,
and benefits to empower our people to take
control of their own needs and to access the
support they want. We’ve funded an
Employee Assistance Programme (EAP) which
offers free third-party support to specialists
who can help manage our people’s health
and wellbeing, and that of their families.
The EAP also provides access to remote GPs,
mental health, physiotherapy, money and
wellbeing support.
Investing in the development
of our people
We want all our people to feel they can
give their best, using their unique skills
and talents to deliver our strategic aims.
We have invested in our Group Learning and
Development (L&D) function so the team
now has far greater capacity to map out
training needs and deliver targeted training
programmes to all parts of the business.
Experience
28
short courses provided following
the addition of eight new courses
this year
30
new eLearning Academy course
developed, taking the total to
109 live eLearning courses
6,458
learning hours of
trainer facilitated
interventions delivered
39,259
eLearning courses completed
77%
average Net Promoter Score
for courses completed
Group-wide
training
We completed a Group-wide training
needs analysis that enabled us to define
development pathways consisting of
18 proposed development solutions.
These solutions span all levels of the
Group from early careers right up to
senior leadership. In FY2023, our
enhanced L&D function enabled:
Promoting the industry
to young people
The longer term future growth plans of
Redde Northgate will require a strong
pipeline of young people wanting to pursue
careers in the vehicle automotive industry.
We have developed an early careers
strategy to shine a light on the vehicle
automotive career opportunities available
to young people at schools and colleges.
The strategy has focused workstreams:
• Apprentice provider partnerships,
• Professional services partnerships
and event attendance
• Digital events
• Award sponsorship
72%
of respondents to our employee
engagement survey believe that
their manager encourages and
supports their development and
aspirations, this was up 2ppt from
the prior year
Employee
engagement survey
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Sustainability continued
The opinions of our people count so we are always looking
to engage with them to create a more positive working
environment and employment experience. Over 5,700 of
our people completed an engagement survey giving the
business a 74% overall satisfaction rating. The survey results
highlighted the measurable progress we are making. We
intend to build on this progress in the next financial year by
delivering a Group-wide recognition scheme and continuing
to improve the communication of our business strategy.
Culture
67%
listening and introducing
new things like more
management training to
drive better conversations
between colleagues and
managers saw this response
grow by 14ppt from last year
Feeling valued
68%
the suite of benefits
we made available
to our people helped
to increase this score
by 8% from last year
Teamwork and Trust
91%
of our people feel that they
work for a great team and
are trusted to do your job,
improving a further 2ppt
from last year
Customer service
85%
of our teams feel proud of
the service they provide to
our customers, a 1ppt rise
on last year
We hosted a Digital Early Careers Event, in partnership
with Spark, enabling us to broadcast an engaging and
relatable early careers story to 1,600 schools and 4,000
students. Four of our current apprentices were featured
with a video of their work experiences. Spark Careers is an
app that connects students and young people, through
their schools and colleges, with businesses, giving them
direct access to some of the UK’s major employers.
Building a future talent pipeline
We are investing in the next generation of
vehicle maintenance and repair technicians.
This includes strengthening our technical talent
value proposition to ensure we recruit, develop
and retain the best people in the industry.
We strongly believe that high quality and
rewarding apprenticeships and trainee
experiences will secure a pipeline of talent to
support our ambitious business growth plans.
c.£500,000 has been invested from the
Digital Apprenticeship Account, up over 55%
on last year. This has not only helped fund our
apprenticeship scheme but also enabled us
to invest in training across the business.
Connecting, listening and learning
The opinions of our people count so we are
always looking to engage with them to create
a more positive working environment and
employment experience. The established
Employee Engagement Forum provides
valuable input into the development of our
rewards and benefits provisions.
Flexible benefits and support
A suite of benefits was made available to all our
people to help in many areas from new family-
friendly policies to support those on maternity,
and paternity leave, the introduction of an
enhanced annual leave policy to an extensive
flexible benefits scheme.
A popular flexible benefit was the Techscheme
where 354 colleagues took advantage of this
benefit. Launching in December the scheme
gives our people a discount off the cost of the
tech, with no upfront cost and repayment spread
over 12 months.
The additional support provided to our people,
throughout the year was well received, with a 6%
increase in the employee survey question related
to pay and an 8% increase in the question related
to benefits.
Digital Early
Careers Event
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Sustainability continued
Impact
Managing environmental impact
Waste control and reduction is a central part
of our ISO 14001 accredited environmental
management system which is regularly
audited to ensure we are continually
improving practice across our workshops,
repair centres and offices. We aim to
promote more effective waste segregation
to increase reuse, recycling and to reduce
the volume of waste that is sent to landfill.
We had a 4% increase in overall waste
volume collected; this was mostly driven by
an increase in metal being collected across
the estate. We carried out an optimisation
project reviewing schedules and collection
configurations.
This helped reduce unnecessary general
waste provisions, whilst instigating a number
of other initiatives including the provision of
vehicle bumper racks and headlight bins at
41 of our sites. This resulted in a 25% reduction
in general waste being sent to landfill and
an overall 3% increase in on-site recycling
compared to the previous 12 months. The
target we have set to achieve by FY2025
is to achieve zero waste to landfill; overall,
99% of the waste collected by our UK
contractor was diverted from landfill.
59,000 tyres were collected and reprocessed
as fuel for use in the cement industry.
Last year we consolidated all our water
management contracts under one provider
to improve oversight of our water use in
England, Scotland and Northern Ireland. This
year we have established a Facilities and
Behaviour Working Group which reports to the
Sustainability Committee. The purpose of this
group is to identify and evaluate opportunities
to reduce the environmental impact of our
estate, instigating projects to reduce waste,
energy and water consumption.
Material and resource efficiency
We have worked closely with organisations
to increase the use of green parts. Green
parts are recovered from damaged vehicles
and their use provides a more sustainable
solution, not only in helping to reduce
carbon emissions but also helping us mitigate
against the current supply challenges.
Insurance companies have set themselves
ambitious environmental targets and are
engaging with their supply chains to get
their support in achieving targets, e.g. waste
reduction. In favour of this we have
commenced a plastic welding trial at two
of our vehicle repairs sites.
Plastic welding is used to repair bumpers,
rather than replace them which reduces
waste and material consumption. Following
a successful completion of the trial we are
implementing a wider rollout programme
which not only includes purchasing more
of the welding equipment but also working
with the manufacturer to carry out training
for our operatives.
We have also improved our internal reporting
processes to better measure the benefits and
reduced environmental impact of the
equipment’s use.
99%
of waste diverted from landfill
40%
predicted saving in carbon emissions
compared to our previous scheme
We have introduced a new paint scheme in our repair
workshops, with significant operational and environmental
benefits. The faster curing time of the new paint results in
a predicted saving of 40% in carbon emissions, compared
to our previous paint scheme.
Going forward, we plan to measure in-use energy/carbon
reduction of the new paint scheme, working closely with
the supplier, to maximise the operational and environmental
benefits it should bring.
New paint scheme
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Energy saving
We are developing further programmes to
reduce our energy consumption, such as
greater use of LED lighting with now over
65% of Redde Northgate sites having full
LED lighting, as do all main office buildings.
The Energy Savings Opportunity Scheme
(ESOS) is UK energy legislation for meeting
the EU Energy Efficiency Directive. ESOS
compliance requires an energy audit of
all our operational energy consumption,
by December 2023.
To meet this requirement, we are planning
to undertake on-site energy assessments
throughout the UK and Spain. The
expectation is that these assessments will
help to inform the development of our net
zero transition plan by providing a list of
opportunities of energy efficient
improvements, across the estate.
Community investment
We are committed to giving back to the
communities where we operate and support
businesses local to our operations. We have
provided ongoing support throughout the
year to St. Teresa’s Hospice, who provide
palliative and end-of-life care and support in
South Durham & North Yorkshire. This includes
providing the free use of two vans.
Blakedale became a member of Greener
Highways last year whose aims are to aid
with education and the implementation
of sustainable initiatives, products, services
and operations across the highways sector.
As an active member, Blakedale sponsored
a stretch of a busy local road where they
carry out regular litter picking duties.
At Northgate we seek to minimise the
environmental impact of our activity,
and Northgate forests allow us to
contribute to this with a direct benefit
for the environment.”
Aurora Asensio,
Marketing Manager of
Northgate Spain
Sustainability continued
To commemorate the International Day of Forests,
celebrated every March, we joined Bosquia Nature to plant
more than 1,000 native trees, including ash, birch, laurel, oak
and walnut trees in key areas of Gijón and Bilbao. In total,
Northgate Spain have planted 2,000 trees in four forests.
Redde Northgate is proud to be a board member of
Darlington Cares, a local initiative dedicated to improving
the community. Our commitment to this initiative was
honoured in November when we won the Darlington
Cares Business Contribution to the Community award.
Community award winners
Planting 2,000 trees
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Sustainability continued
Impact continued
Energy and carbon reporting
This section incorporates the requirements for reporting of
greenhouse gas emissions, energy consumption and energy
efficiency actions included in the Companies Act 2006
(Strategic Report and Directors’ Report) Regulations 2018
(the Regulations).
Reporting and baseline year
We have aligned our reporting and fiscal
years, so the information presented covers
the FY2023 period from 1 May 2022 to
30 April 2023. Following the introduction of
FMG RS emissions data in FY2021, FY2022 was
considered a suitable year to establish as our
baseline year and we have subsequently
used FY2022 as the starting point for our
emission reduction targets.
Analysis
Our absolute Scope 1 emissions grew by 13%,
which is due to an increase in our fleet size
and a larger number of vehicles be repaired
in our workshops, which use gas for heating
and operations. Our Scope 2 emissions
reduced by 3%. The on-going LED lights
roll-out programmes along with the increasing
proportion of renewable energy available
in the electricity networks accounted for
the reduction in Scope 2 emissions. In the
reporting year our revenue excluding vehicle
sales grew by 22% whilst our emission intensity
dropped by 8%.
Considerable work has been undertaken
this year to evaluate the contributory
elements of our total GHG footprint for all
three emission scopes. This work produced
a more complete picture of our value stream
emissions (Scope 3) and enabled the setting
of absolute carbon reduction targets for
Scope 1 and Scope 2 emissions (read more
on page 61).
The new Sustainability Committee and series
of subgroups will be focusing their efforts in
the next few months on developing and
deploying a comprehensive transition plan
to achieve our carbon reduction targets and
help progress our carbon net zero journey.
Consolidation approach
and organisational boundary.
We have derived the emissions data
presented using the operational control
approach, required under the Companies
(Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report)
Regulations 2018. We have included each
facility under operational control within the
figures. The Group has used the principles
of the GHG Protocol Corporate Accounting
and Reporting Standard (revised edition),
ISO 14064 -1.
Methodology
We have used Defra’s current conversion
factors in arriving at the information supplied.
The GHG data has been verified by an
independent, UKAS-accredited, third party
assessor.
Measuring the carbon footprint
of our value chain
Working closely with environmental
consultants we have taken a “whole
lifecycle” approach to determining the
carbon emissions of our value chain. The
purpose of this assessment was to better
understand our GHG footprint across all
three emission scopes.
The enhanced understanding of our value
chain emissions has enabled us to develop
reduction plans and develop plans to
improve our GHG reporting capability.
FY2022 was used as the baseline; the scope
of the emissions measured covered all
territories and operations, across the Group.
Current
reporting
period
Previous
reporting
period
Baseline
reporting
period
Greenhouse gas (CO
2
e) emission source
May 22
-Apr 23
May 21
-Apr 22
May 21
-Apr 22
Scope 1 – Combustion of fuel and operation
of facilities 22,829 19,773 19,773
Scope 2 – Electricity, heat, steam and cooling 4,165 4,284 4,284
Revenue (£m) 1,337 1,094 1,094
Intensity ratio: Tonnes of CO
2
e per £m of revenue 20.2 22.0 22.0
Global emissions – Scope 1 5,041 3,187 3,187
Global emissions – Scope 2 1,011 939 939
UK emissions – Scope 1 17,78 8 16,586 16,586
UK emissions – Scope 2 3,154 3,345 3,345
Energy consumption 2023 (kWh) 2022 (kWh) 2022 (kWh)
Scope 1 – Combustion of fuel and operation
of facilities 10 0,186,831 90,844,288 90,844,288
Scope 2 – Electricity, heat, steam and cooling 20,799,832 20,390,430 20,390,430
Global consumption 25,604,336 18,323,458 18,323,458
UK consumption 95,382,328 92,911,2 6 0 92,911,2 6 0
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Sustainability continued
The analysis identified that Scope 1 and
Scope 2 emissions make up just under 1%
of our total value chain emissions with the
balance resting in Scope 3, both upstream
and downstream. Further breaking down
the Scope 3 emissions, c.14% related to
embodied carbon of the vehicles we
purchased, c.43% is from vehicles that are
sold by us and c.40% is derived from the
vehicles whilst they are on hire to customers.
We intend to use this data as a starting point
to evolve our knowledge and understanding
of Scope 3 emissions to a point where we
can then identify related upstream and
downstream emission reduction opportunities
to complement our Scope 1 and Scope 2
targets.
Decoupling emissions from
business growth
The analysis of GHG emissions, along with
the modelling of expected business growth
has enabled us to set two interrelated
targets, with the approach used informed
by a science-based target methodology.
In addition, we undertook an assessment of
over 15 peer group companies to evaluate
the range of emission reduction targets
being set in our industry.
From the starting point of our FY2022
baseline, we are committed to using 100%
renewable electricity and to an absolute
Scope 1 and Scope 2 emission reduction
target of 10% by 2027.
The absolute GHG emission reduction
target is ambitious when considered in
the context of our growth plans, along
with the limited availability of EV and
hybrid commercial vehicles.
From targets to action
A detailed transition plan is being developed
which sets out what mitigation actions we will
take to achieve the 10% absolute reduction
target by 2027. The Sustainability Committee
and the supporting subgroups will play a
pivotal role in mapping out the reduction
trajectory and managing the emission
reduction activities.
We are finalising work on a GHG
management plan which will prescribe
the processes and systems we will use to
accurately capture and report on fuel,
energy, and emissions data.
GHG emissions across our value chain
Upstream activities
Downstream activities
0.2%
Purchased electricity
99.1%
1
3
2
0.7%
GHG emissions from
sources owned
or controlled by
Redde Northgate
0.37% 0.01% 0.11% 0.45% 0.25% 13.97% 2.05%
Employee
commuting
Business
travel
Waste
generated in
operations
Upstream
transportation
& distribution
Fuel & energy
related
activities
Capital
goods
Purchases
good and
services
Downstream
transportation
& distribution
Use of sold
products
End of life treatment
of sold products
Downstream
leased assets
0.40% 42.83% 0.09% 39.47%
2022 to 2027 targets for Scope 1 and Scope 2
100% Renewable electricity target
10% Absolute reduction in emissions
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Sustainability continued
Transition
Since 2016 transport has become the UK’s
largest emitting sector of GHG emissions.
In the EU, road transport is the biggest emitter
in the EU’s transport sector and accounts for
nearly three-quarters of transport-related
GHG emissions. Given this context, moving
away from ICE to EVs or other mobility
solutions is vital in the transition towards
becoming a low carbon society.
We are playing our part, enabling a smooth
transition towards lower carbon mobility
solutions. With our end to end support,
in-house expertise and capabilities we are
providing a broad array of support services
to our customers, many of whom have
themselves set ambitious net zero targets
and are looking for expert support to make
meaningful progress.
We therefore see significant commercial
opportunities for the business in enabling
the energy transition for customers, which
we have brought together under our
Drive to Zero programme.
The services we are providing extend well
beyond the provision of lower carbon
vehicles, encompassing an integrated
offering (read more on pages 10 to 11) and
we are working to build our internal technical
knowhow and seeking out innovation to help
accelerate this key contributor to reducing
climate change.
Vehicle charging infrastructure
Our ChargedEV business in the UK specialises
in the supply and installation of electric
vehicle charging equipment right across
the UK into both homes and workplaces.
They manage the whole process offering
a full turnkey solution consisting of supply,
installation, groundworks, maintenance,
and aftercare. In FY2023 they installed 7,172
domestic 7kW chargers and 267 commercial
22kW sockets. Since FY2022 ChargedEV have
installed 219 charging points at most of our
operating locations and offices in the UK.
44
new charging points installed in Getafe
in March 2023
Within the framework of its Sustainable
Mobility Plan, Northgate Spain has
opened a hub with 44 charging points
at its offices in Getafe. The plan is to install
more than 140 charging points across our
Spanish operating location in FY2023 and
FY2024, to promote sustainable mobility
and facilitate the penetration of EVs.
The initiative represents a great increase
in the network of public charging points
in the region, since these new charging
points are available to any electric
vehicle user, as well as to the company’s
own customers and employees.
“At Northgate we wanted
to be pioneers by sharing
our network of chargers, to
facilitate electrification for
any user with this hub of 44
charging points, especially
relevant in an area with a
large business fabric.”
Teresa Romo,
Director of Development and
Sustainability at Northgate Spain
Working in Partnership
with Iberdrola
We have formed a partnership with
Iberdrola, Spain’s largest utility company.
This partnership is aimed at promoting green
mobility and helping Northgate in its
decarbonisation process. This partnership
has started to deliver:
• Bundling our EVs and Iberdrola’s electric
chargers with public charging services
already in place
• Promoting our EVs to Iberdrola employees
and customers
• Managing the second phase of installing
solar panels in our branches
• Providing a renewable energy contract
for the energy we use at our facilities
• Undertaking energy efficiency
benchmarking and action planning for
our estate and operations
51kWp installed at
our Getafe HQ site
in January 2023
In FY2023, working in partnership with
Iberdrola, solar arrays have been installed
at nine of our Spanish sites. This is in addition
to seven sites that already had solar PV
arrays installed in FY2022 and amounts to
473kWp of incremental renewable solar
energy that we are now able to generate.
Renewable energy
Sustainable
Mobility Plan
in Spain
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Sustainability continued
Case study
Vehicle technology is advancing at a
rapid pace. We have moved towards
increased electrification of drive
trains and a greater proliferation of
advanced driver assistance systems
(ADAS). There is growing competition
in the employment market for skilled
technicians who are in high demand
in the automotive repair and
maintenance sector.
To address the challenge of
automotive technical advancement
and skill shortages we have invested
heavily in advancing our technical
Optimising vehicle use
and fleet management
Northgate Spain launched an
updated telemetry solution which
allows customers to optimise vehicle
use and fleet management. With the
new update, a large number of
measurements and information of
the driver or the vehicle can be
accessed from the platform in an
easy and intuitive way, such as route
optimisation. The updated platform
now better supports EVs by providing
updates to fleet teams on charging
capability and capacity, across
the Group.
This investment culminated in
Milton Keynes (Northgate) getting
IMI approved training status, adding
to the approved status of the Goole
facility (FMG RS). This has enabled
us to design, develop and deliver
accredited IMI technical training
which will play a pivotal role in
upskilling our motor vehicle
technicians in electric/hybrid vehicle
system repair and replacement.
status along with help locating the
nearest charging points.
Industry engagement
We have board level representation
on UK and Spanish industry bodies,
BVRLA and AEDIVE. Working
alongside these bodies we are
engaging with Government
departments, providing insight into
the most effective methods to drive
decarbonisation, through focus
areas, legislation, and taxation
mechanisms.
Technical training at Redde Northgate and FMGRS
Technicians trained Training programme
240
IMI Level 3 award in electric & hybrid vehicle system repair and
replacement
114
Fundamental electrics
74
Advanced braking
26
High voltage safe working
Achieving the IMI Approved Training Centre Status
means we’re able to meet the future needs of the
motor industry more effectively by having the
ability to provide IMI accredited technical training.”
Steve Coble
Northgate UK Head of Workshops
Technical
excellence
Building capacity and capability
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TCFD report
TCFD report
Statement of consistency
This report was prepared in line with the Taskforce for Climate-related Financial Disclosures
(TCFD) All Sector Guidance and associated annexes; as Redde Northgate is not a financial
or appropriate sector specific company, no additional guidance was incorporated.
Reasonable assurance is obtained over Scope 1 and Scope 2 emissions.
Introduction
This is Redde Northgate’s second TCFD report, having undertaken voluntary disclosure last year.
This now mandatory report expands on our previous work and includes progress in quantifying
the impact of climate-related opportunities for our business. Through our disclosures, we seek
to improve transparency and facilitate discussions with stakeholders on this key issue. This
report details an enhanced understanding of our emissions footprint and impacts; together
with the measures necessary to respond to and manage climate-related risks and to harness
opportunities in what is an uncertain global emissions future.
Governance
Our Board of Directors has ultimate responsibility for the Group’s ESG strategy and activities,
including ensuring best practices, emerging trends and key issues related to ESG strategy,
governance and risk management are properly considered. Our sustainability strategy is taken
into account in our financial planning, including through active Board oversight. Both the
CEO and CFO report at Board meetings on a regular basis regarding progress on this strategy,
including key activities, implementation and progress against emissions reduction targets.
Key transition-related activities, risks and opportunities have been considered both at
executive management and Board level (see Section 172 report on pages 72 to 76).
To advance our strategy and decarbonise across the business, climate-related incentives
are contained within remuneration packages to support year on year progress and drive our
performance towards our emissions targets and long term net zero ambitions. To determine
the Executive Directors’ annual bonus, 25% is based on non-financial strategic KPIs (see KPIs
on pages 28 to 29), and these align with the responsibilities that drive the Group’s focus and
development in sustainability, such as progressing the low carbon transition within the
business’s vehicle fleets and support for fleet customer EV transition.
Redde Northgate’s Sustainability Committee oversees our strategic development across
sustainability issues, including the development of a systematic and collaborative approach
to climate action with our stakeholders and will report to the Board quarterly.
The Committee is chaired by the CFO and supported by our Head of ESG, who sets the
agenda in relation to low-carbon transition programmes and operational actions. The
transition to non-ICE vehicles is principally managed as part of the Group’s overarching
corporate strategy, as it is central to our core business activities.
Possessing significant industry and commercial experience, the Board is well-placed to assess
climate-related risks and ensure appropriate mitigating strategies are in place. We build on
this expertise at both Board and executive level to enhance our climate-related capabilities
and understanding across our governance functions through regular training, engagement
on ESG topics with both internal and external stakeholders, together with our focus on ESG
disclosures, including climate-related and TCFD exercises.
In FY2023, the Board received climate-related training by expert consultants, covering emissions
accounting and disclosure considerations to support the setting of Redde Northgate’s
operational emission reduction targets. The Board will be reviewing and discussing the
implications of incoming regulations, data quality challenges covering carbon accounting
and approve our next-phase operational emission reduction targets. The Board also reviewed
both fleet transition strategy and lobbying efforts as part of the UK industry BVRLA Van Plan.
Within the business, there are a variety of education initiatives, including training
presentations and town hall events to broaden understanding and engagement, and these
sessions will continue to be developed and tailored to meet specific business units needs.
Strategy
Redde Northgate’s long term climate commitment is to be net zero by 2050; and we view the
transition to low carbon mobility solutions as fundamental to our business strategy. Our support
for customers’ transportation decarbonisation actions is set out on pages 10 to 11, and include
both consulting and the provision of EV vehicles and related charging infrastructure and green
energy. We are also active within our supply chain with collaborations and supporting policy
initiatives to help accelerate the transition for what is a hard-to-abate sector.
For our second TCFD report, we built on our 2021 scenario analysis to incorporate site-level
physical risk exposure analysis, to further explore potential risks to the business over short,
medium and long term time horizons. Our physical risk analysis was complemented by an
exploration of transition risks on a qualitative level. Our analysis covered key timeframes
(as defined in the Time horizons table on page 65), which link to our fleet renewal cycles, key
regulations and policies for our sector and our net zero commitment. We assigned timeframes
to each risk and opportunity based on expected material impact, and quantified the impact
where possible. A material climate impact is defined as a percentage of the risk materiality
point (RMP) value of £4m, as defined by our Enterprise Risk Management (ERM) framework;
medium to high financial impact is greater than 12.5% of RMP.
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At present, we operate from 175 sites, including workshops, body shops and branches, along
with offices and call centres across the UK, Ireland and Spain. This geographical spread
presents a range of different climate and environmental conditions, as well as moderate
variances in climate-related maturity across market, technology, policy and legal aspects.
This diverse geographic spread means we have flexibility and resiliency within our operations,
and we can share learnings between our business segments and across locations.
Physical risk exposure was assessed under two future states of the world using the latest
Intergovernmental Panel on Climate Change (IPCC) scenarios specified in their sixth
assessment report. The IPCC Shared Socio-economic Pathways (SSPs) are a natural choice
as these scenarios are widely recognised, based on credible scientific databases and are
used to inform our global climate policy.
SSP 5-8.5 (fossil fuel development); this is where current CO
2
emissions levels approximately
double by 2050, and the global economy grows, fuelled by exploiting fossil fuels and
energy-intensive lifestyles, with average temperatures 4.4ºC higher in 2100.
SSP 2-4.5 (middle of the road), this is where progress toward sustainability is slow, with
development and income growing unevenly. In this scenario, average temperatures rise
2.7ºC.
1
For physical risks
2
, the following hazards were assessed: wildfires, inland flooding, heatwaves,
sea level rise, water stress and cyclones. As expected, Redde Northgate has minimal exposure
to most of these hazards due to the operational profile of our business. We expect physical risks
to materialise around 2030/2040 when scenario pathways diverge. Further detail on material
impacts and mitigation activities can be found in the Physical risks table on page 66.
Transition risks were explored by applying IEA Global Energy and Climate (GEC) model
scenarios
3
and National Grid Future Energy Scenarios
4
, which align with Redde Northgate’s
long-term net zero commitment.
The IEA scenarios applied assess three states of global change:
• Net zero emissions by 2050 sets out a pathway to achieve net zero emissions within the
electricity sector.
• Announced pledges shows what would happen if current commitments stayed on track
and were met on time;
• Stated policies looks at the current commitments and associated policies underpinning
them.
The National Grid set out four different future states of the world and credible ways that the UK
can achieve net zero by 2050, and decarbonise its electricity system by 2035:
• Falling short – a low level of societal change and a slow speed of decarbonisation;
• System transformation – a moderate rate of decarbonisation relying on hydrogen and
energy efficiency as opposed to behavioural change;
• Consumer transformation – a moderate rate of decarbonisation with a high rate of
energy efficiency and demand side flexibility;
• Leading the way – both a fast rate of decarbonisation, backed by an ambitious energy
strategy with a high level of societal and lifestyle change
The IEA and National Grid scenarios were selected due to the sectoral specific analysis and
industry dependencies. The National Grid scenarios also apply specifically to the UK market,
and therefore provide tailored insights into the potential future changes to our UK strategy
and feed into our wider organisational strategy.
A list of risks and opportunities were identified and are set out below.
Time horizons
Short term: 0-3 years (up to 2025) • Redde Northgate operates a three year fleet
renewal cycle
Medium term: 3-8 years (up to 2030) • UK ICE sale ban by the 2030s and subsequent
EU legislation transitioning to zero emission cars
and vans by 2035
• 40% renewables share of gross final
consumption by 2030 proposed under EU
Renewable Energy Directive
Long term: 8+ years (up to 2050) • Internationally recognised target year for
achieving global net zero emissions per the
Paris Agreement
1 https://www.ipcc.ch/assessment-report/ar6/
2 Acute risks are defined as extreme weather events such as water stress, flooding and storms, and chronic risks
as those changes in average climate conditions, these include rising sea levels and coastal flooding.
3 https://www.iea.org/reports/global-energy-and-climate-model/understanding-gec-model-scenarios
4 https://www.nationalgrideso.com/future-energy/future-energy-scenarios/documents
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Physical risks
Likelihood
Short Medium Long Severity Resilience
Hazard
Sea level rise
1 1 1 0 0
Heatwave
1 1 1 0 0
Flooding
1 1 1 1 1
Cyclones
1 1 1 0 0
Water stress
3 3 3 3 3
Wildfire
1 1 1 0 0
Water Stress
Under a worst case scenario Redde Northgate identified exposure to water stress across all
seven sites assessed, with the most significant impacts in Spain. Similar outcomes were seen
under a middle of the road scenario with less reduced impact across some UK based sites.
Significant physical risks
Redde Northgate found no material exposure to its physical operations from the chronic risks
associated with climate change.
Heatwaves
• Develop heatwave response plans
• Incorporating shading and insulation measures, using energy-efficient cooling systems
• Providing education and training
Flooding
• Ensuring emergency response plans are comprehensive and regularly updated with a
focus on high value assets/critical sites
• Engaging with insurance providers
Water stress
• Conduct water risk assessments, to understand complete risk exposure and inform the
development of risk management strategies
• Implement water management practices to document resilience measures and develop
plans to reduce water use/increase water efficiency
• Promote sustainable water practices
Sample hazard
exposure Severity Resilience Scale
High (>15%) Critical No resilience measures
5
High Mostly unmitigated
4
Moderate (10 -15%) Moderate-high Partially mitigated
3
Moderate Mostly mitigated
2
Low <10%) Low Fully mitigated
1
None Mitigation not required
0
The Physical risks table shows the transition risks identified and we anticipate greater
quantification of risks in future iterations of our TCFD reporting.
General risks include legal action, fines and/or reputational issues, resulting in increased
compliance costs, reduced customer demand and a potential impact on the cost of capital.
We identified that policy and legal risks, such as incoming mandatory reporting obligations,
could result in requirements for more resources to remain compliant, and heightened
expectations from stakeholders. To mitigate the impact of these risks we continue to monitor
the legislative environment to identify regulatory changes well in advance, and through the
BVRLA and AEDIVE engage with relevant governments on upcoming policy; we therefore
consider policy and legal risks to be adequately monitored and mitigated.
At present, we are transitioning to an EV fleet, with an objective aligned with national and EU
regulations, to have a non-ICE fleet in the UK and Ireland by the mid-2030s, and all countries
by the mid-2040s. This will enable us to significantly reduce our carbon emissions throughout
our value chain, and our investment, skills training and commercial strategy plans are
aligned with this transition, and reflected in our Drive to Zero strategy and actions. Therefore
Redde Northgate expects its business to be positively impacted by the transition to a
1.5-degree world.
TCFD report continued
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Transition risks
Risk Potential outcomes
Likelihood
Severity ResilienceShort Medium Long
1 Policy and legal
a Increased pricing of greenhouse emissions Reduced profits and higher operational costs
1 4 5 2 4
b Increased acquisition costs due to policy changes in fuel subsidies
driving increased demand
Increased capex
3 4 4 2 3
c Litigation regarding greenwashing Reputational damage, reduced customer demand and legal
pay-outs
1 1 1 3 4
2 Technology
a Insufficient charging infrastructure Lower demand for EVs
4 3 2 3 2
b Limited supply of zero emissions vehicles Decline in revenues
5 3 2 3 2
3 Market
a Increased competition within the mobility industry Reduced market share and revenues
3 4 5 2 2
4 Reputation
a Failure to meet stakeholder expectations, missed commitments
or targets
Decreased access to financial and human capital resulting in lower
employment attraction and retention and higher costs of capital.
1 1 1 4 1
Likelihood Severity Resilience Scale
Virtually certain Critical No resilience measures
5
Likely High Mostly unmitigated
4
More likely than not Moderate-high Partially mitigated
3
About as likely as not Moderate Mostly mitigated
2
Unlikely Low Fully mitigated
1
Very unlikely None Mitigation not required
0
Mitigation measures
Policy and legal
Advocating for climate action: support policies to reduce greenhouse gas emissions,
promoting the use of renewable energy sources, and encouraging sustainable business
practices
Technology
Continual investment in research and development projects. Continue to monitor demand
for new technologies and financial incentives
Market
Supply chain engagement, with long-term contacts to secure high-demand resources and
extending our products and services to stay ahead of changing mobility needs.
Reputation
Detailed transition plan and public disclosure (follow the Transition Plan Taskforce progress
and framework development
TCFD report continued
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Transition opportunities
Opportunity Company progress Short Medium Long Impact contribution
Products and services
a Provision of turnkey ZEV
and charging solution
to simplify the transition
for customers
We have designed our Drive to Zero offering that helps our customers conduct suitability
assessments of their fleet to transition to ZEVs where possible. In addition to helping source
the vehicle and identify an EV charging point, we offer an aftermarket support and
management service, making the move to ZEV as streamlined as possible. We are also
starting to offer bundled charging points and solar PV packages to customers.
3 3 5 4
b Faster access to ZEVs The Group has invested time researching new OEMs in order to gain access to non-ICE
vehicles. Customers that have established more aggressive net zero plans may be willing
to pay a premium to convert their fleet faster, enhancing market share and revenues.
3 4 5 4
Resource efficiency
c Increased energy
efficiency across our
operating sites
We continue to invest in LED lights, which have a positive impact on energy usage to reduce
operating costs. Across our work and paint shops, we are implementing behavioural training
programmes to raise energy usage awareness and better operating practices. This will
reduce operating costs
4 4 4 2
d Increasing renewable
energy supply across
our operations
Investing in solar projects across our portfolio in Northgate Spain to reduce operating costs
and our carbon footprint.
4 4 4 2
TCFD report continued
Opportunities impact:
• Within our analysis we expect that it is likely our larger fleet customers will in the first
instance rent rather than own any electric LCVs.
• Depending on the availability of charging infrastructure we could see our UK rental
revenues rising by 2-4% over the medium term through incremental revenues from such
fleet growth. This is based on the assumption that electric LCVs will grow to between 2-4%
of the rented fleet in line with the UK car parc, and will be at a higher rental value due to
their higher lifetime holding cost. UK revenue from vehicle hire in FY2023 was £367.7m,
with growth of 2-4% implying £7m-£15m of incremental revenue.
• We seek to improve the quantification of identified opportunities year on year in line with
the quality of our climate-related reporting.
Likelihood Impact contribution Scale
Virtually certain Significant
5
Likely High
4
More likely than not Moderate-high
3
About as likely as not Moderate
2
Unlikely Low
1
Very unlikely None
0
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Risk management
Redde Northgate has embedded risk management process across the business and reports
this process regularly to the Board. Climate transition issues are considered both fundamental
to our commercial success and such risks and opportunities are assessed both against relevant
financial planning horizons and aligned with our customer strategy and demand requirements.
Our risk identification, assessment, methodology and appetite are described on pages 40 to 49
and are reviewed at a minimum on a quarterly basis. Where climate risks extend outside the
timeframe of our Enterprise Risk Management process horizons, they are assessed using the
same methodology, but are considered within the longer term context of our sustainability
strategy and targets and under the scrutiny of the Sustainability Committee, which also
reports to the Board.
Redde Northgate’s mitigation and resiliency measures, as set out in the Physical risks table
on page 66, appropriately manage the risks identified within our scenario analysis. Our risk
management process captures climate-related matters, and in turn, these form part of our
Group Risk Register, which is reviewed by the Board.
The Board has responsibility for the Group’s overall approach to risk management and
internal control, which includes ensuring the design and implementation of appropriate risk
management and internal control systems. This comprises assessing the effectiveness of these
systems, which includes regular reviews to ensure that the Group is identifying, considering
and, as far as practicable, mitigating the risks for the business.
With regards to physical risks, the following recovery plans have been developed:
• Loss of electrical power
• Failure of critical IT applications;
• Short term denial of access to facilities with all services intact (e.g. road traffic incident
preventing employees from getting to work);
• Long term denial of access to facilities and all services.
• Pandemic.
Transition risks have mitigation measures in place and these are informed by our existing
governance and risk management processes. With the majority of these risks relating to
transition to non-ICE vehicles for customers, they are also a core focus of our commercial
teams in both day to day actions and long term strategic planning.
Metrics and targets
Redde Northgate seeks to enhance its disclosures through improved year on year reporting;
in the past year this has included quantification of Scope 3 emissions for FY2022 and the
setting of operational emission reduction targets as an interim measure towards our net zero
by 2050 ambitions.
Our emissions accounting follows the GHG protocol standard and, where possible, prioritises
supplier or product-specific activity data to improve inventory quality. We recognise the role
of effective emissions data inventory management and prioritisation of improving data
quality. We have planned workstreams to enhance the accuracy of our emissions accounting
and have a site-level reporting system in place. A summary of our FY2023 GHG emissions is set
out in our SECR reporting on page 60.
There has been a significant focus in the year on setting Group-wide operational emission
reduction targets (see page 61), and the related KPIs to monitor progress. The FY2023
Sustainability Report sets out our emissions mitigation activities in support of our transition plan,
encompassing emissions energy reduction, inclusive of our waste and water management
and renewable energy options (including installation in FY2023 of 473 kilowatt peak (kWp) of
incremental renewable solar energy that we are now able to generate in Spain). This plan will
be set out in more detail in FY2024.
Redde Northgate’s targets
• A 100% renewable electricity target for direct operations by FY2027;
• A 10% reduction in Scope 1 and Scope 2 (market-based) emissions by FY2027 from a
FY2022 base year.
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Looking forward
TCFD element 2023 Actions Status 2024 Next steps
Governance A Sustainability Committee has been formed with the first session
being held in April
The Sustainability Committee’s focus for the first half of the year will be agreeing
the mitigation actions necessary to deliver the carbon reduction targets
ESG training, including climate change was delivered by an
external provider to the Board.
Update ESG policies, including the policy on climate change, to reflect the new
carbon reduction targets that have been set
A Head of ESG was appointed to lead on sustainability and
climate change. Further work will be undertaken to develop
a new ESG approach.
Continue to refine our approach to ESG and climate change action, including
a broader spread of non-financial targets and metrics
Strategy Undertaken a double materiality exercise to link financial
and environmental impact. Company wide training required
on climate change.
Develop a carbon literacy training programme to improve the decarbonisation
knowledge and skill of our people
Sustainability sub-groups have been formed to develop the
climate change mitigation strategy and approach
Develop, with the support of the sub-groups, a carbon net zero transition plan.
Undertake site energy assessment to inform the transition plan and meet our
obligations under the Energy Saving Opportunity Scheme (ESOS)
Risk management Physical risks were assessed for operating locations throughout
UK and Spain.
Assess the continuing suitability of business continuity plans to address issue such
as heatwave and floods
Transition risks were explored by applying IEA’s Net Zero
by 2050 scenario and National Grid decarbonisation scenarios.
More work required on supporting ESG metrics
Develop, with the support of the sub-groups, a suite of ESG metrics to measure
and report on transition risks
Metrics and targets Absolute emission reduction targets set for Scope 1 and Scope 2.
Communicate and operationalise the targets throughout the Group.
Upstream and downstream Scope 3 GHG emissions mapped
and reported. Work continuing on refining data collection
processes.
Continue evaluation of Scope 3 data to work towards the setting of a Scope 3
reduction target within the next two to three years
Finalise the GHG Management Plan to prescribe the process and systems for
effective GHG emission data gathering
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Non-financial information statement
Requirement Policies and standards which govern our approach Risk management and additional information
Environment • Environmental statement
• Health and safety policy
• Waste minimisation and recycling policy
Impact pages 58 to 61
Transition page 62
Employees • The Respect Training eLearning package
• Responsible business policy
• Code of business conduct
• Whistleblowing policy
• Health and safety policy
Experience pages 56 to 57
Employee numbers by gender page 54
Diversity pages 80 and 87
Safe, secure and healthy page 56
CEO’s remuneration compared to employees
pages 117 to 118
Gender pay gap report published on qualifying
entities’ websites
Human rights • Modern slavery statement
• Code of business conduct
• Whistleblowing policy
Governance page 54
Ethics, anti-corruption and compliance
page 54
How the Board monitors culture page 86
Anti-corruption and anti-bribery • Code of business conduct
• Whistleblowing policy
Governance page 54
Ethics, anti-corruption and compliance
page 54
Social matters Experience pages 56 to 57 Our communities pages 56 to 57
Policy embedding, due diligence
and outcomes
Governance framework and structure
pages 81 to 83
Board activity during the year
pages 72 to 76
Report of the Audit Committee pages 93 to 97
Principal risks and impact
on business activity
Identifying and managing risks
pages 40 to 43
Principal risks and uncertainties
pages 44 to 49
Description of business model Our business model pages 8 to 9 Our strategy pages 17 to 19
Non-financial key performance indicators Operational highlights page 1
Key performance indicators pages 28 to 29
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Section 172 statement
Promoting the success of the Company for the benefit of all
In accordance with Section 172 of the Companies Act 2006 (Section 172), the Group and
its Directors act in the way that they consider in good faith would most likely promote the
success of the Company for the benefit of its members as a whole. Throughout the Annual
Report and Accounts, we provide examples of how the Group has taken into account the
likely consequences of decisions in the long term, fosters and builds relationships with
stakeholders, understands the importance of engaging with our employees and giving
consideration to their interests, understands the impact of our operations on the communities
in the regions where we operate and the environment we depend upon and attributes
importance to behaving as a responsible business.
The Board appreciates the importance of effective stakeholder engagement and considers its
stakeholders’ views in its decision making and setting its strategy. The Board also understands
the need to act fairly between the Group’s members. Although the Board’s decisions do not
always impact all of the Group’s stakeholders to the same extent, by having a process in
place for decision making, the Board ensures that it has due regard for the interests of its
stakeholders, including employees, customers, suppliers, shareholders and regulators,
when taking decisions.
More details on stakeholder engagement can be found throughout the Annual Report and
Accounts and in particular on page 9 “Our stakeholders”. The following principal decisions
and activities provide specific examples of how the Board and its Directors have complied
with Section 172 and have considered, individually and collectively, stakeholder interests and
impacts in making different decisions that support the implementation of the Group’s strategy
and the delivery of the Group’s objectives now and in the longer term. Details of how the
Group’s Board and Committees of the Board operate, their responsibilities, and the matters
they considered during the year are contained in the Corporate Governance Report from
pages 77 to 129.
Decision: The Group’s strategic focus
Strategic focus
and actions
supported by
the Board
The Group’s successful delivery of substantial growth in financial performance through our business model and the execution of our integrated mobility platform strategy
has been a central focus of Board decision making, at a time when the Group and its stakeholders have continued to experience sectoral challenges including in the supply
chain challenges in the global automotive industry and in direct inflation costs. Our strategic focus reflects our consideration of the interests of our key stakeholder groups.
Stakeholder
considerations
and outcomes
Customers: • Our integrated proposition provides a broader customer offering across vehicle rental, vehicle data, accident management, vehicle repairs, fleet
management service and maintenance, vehicle ancillary services and vehicles sales.
• The Board has supported this strategy because it affords our customers greater simplicity and efficiency benefits through outsourcing to us, and we
have seen that this approach has been central to our success in winning large multi-year contracts with the customers who we have onboarded in
the year and with an additional customer due to go live in the autumn.
• We regularly engage with our customers to understand their needs and enable them to receive the widest benefits of our proposition (whilst being
mindful of supply chain and other economic challenges). As part of this, the Board has considered both the services customers look to receive,
and the requirements that underpin demand for these services.
Suppliers: • The Board has maintained careful oversight through the year on the performance of the Group’s businesses in light of these economic conditions. The Board
has taken care in reviewing current and future fleet supply in Northgate Spain, where vehicle supply has recovered faster, and in Northgate Vehicle Hire
UK&I, the strength of demand for used vehicle sales (positively impacting residual values), as well as the impacts of supply chain challenges, repair times
and hire lengths in the Redde businesses.
• The Board has also invested significant time and expertise in considering the Group’s pipeline of vehicles, as the Group has focused on building and
managing relationships with OEM providers of EV and ICE vehicles to broaden and enhance our fleet proposition and provide versatility and diversity
for our customers. The Board has had specific briefings from senior management to discuss supplier partnership opportunities.
• The Group regularly reviews its supply chain and maintains appropriate supplier codes of conduct and high levels of corporate governance and
compliance more generally.
Our people: • In our 2023 Employee Engagement Survey, 83% of our people indicated their belief that Redde Northgate is in a strong position to succeed and grow
over the next two years and 85% were proud of the services that they provide to our customers. Our people are highly motivated by the Group’s
successful communication and delivery of its strategy and its services, and this feeds through into better financial and customer performance.
Shareholders
and other
Stakeholders:
• The benefits that the Group’s customers see in the Group’s strategic proposition, including the benefits of strong partnerships with our suppliers and broader
supply chain and the Group’s commitment to foster business relationships and maintain high standards of business conduct are reflected in the Group’s
strong financial performance and reputation; and in this way benefit the Group’s stakeholders generally, including its shareholders and employees.
• The Executive Directors regularly consult our shareholders on the Group’s strategy and performance.
Looking ahead As the Group continues its strong financial performance trajectory, through acquisitions and organic development, despite challenging macro events, the Board will
continue to review the Group’s performance and delivery of its strategy.
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Section 172 statement continued
Decision Our people
Strategic focus
and actions
supported by
the Board:
The Board has made people at all levels in the organisation a focus of its decision making during the year:
Our wider workforce: The Board has placed a significant focus on our people again this year, particularly given the unprecedented cost-of-living challenges they have
faced, supporting significant pay and benefits decisions for our wider workforce, including cost-of-living payments made in December 2022 and April 2023, pay review
increases (with significant pay increases for colleagues at lower salary levels with increases between 9% and 12%), the launch of our 2022 Save As You Earn Scheme (SAYE)
and our Free Share (YourShare) programmes and other benefits.
Learning, development and accessibility: The Board has supported our Group-wide rollout of apprenticeships, and broader learning and development opportunities.
These include leadership and management training in our business divisions, our e-Learning Academy and an early careers strategy building brand awareness and
relationships with schools and colleges (including office-based early careers apprenticeships in FMG and a Digital Early Careers event connecting to 1,600 schools and
4,000 students). This year we have also partnered with the Careers Enterprise Company to promote our Early Careers apprenticeship opportunities, signed the Youth
Employment UK Charter (supporting young people into employment) and the Care Leavers Covenant (providing care and career access to care leavers aged 15 to 35).
Executive remuneration: The Remuneration Committee has engaged with shareholders in relation to the introduction of its 2023 Remuneration Policy, as well as the vesting
outcome for the 2020 LTIP and the benefits we have delivered to our wider workforce this year. John Pattullo, Remuneration Committee Chairman and Senior Independent
Director, held 14 shareholder meetings and one meeting with a proxy agency, to ensure the Remuneration Committee’s proposals and/or approach on these matters was
supported by those stakeholders. The Remuneration Committee’s consideration and approach to the outcome of these matters is more fully reported in the Directors’
Remuneration Report on pages 98 to 124.
Stakeholder
considerations
and outcomes
Customers: Workforce recruitment, development and remuneration are essential to the continued success of the Group’s businesses and strategy, enabling and
incentivising our colleagues to deliver value and high levels of service to our customers.
Suppliers: • The Group regularly reviews its supply chain and maintains appropriate supplier codes of conduct, including with respect to the national living wage,
modern slavery and the welfare of the people who work for our suppliers, and high levels of corporate governance and compliance more generally.
Our people: • Although the primary reason for our focus on wider workforce remuneration was to mitigate potential economic hardship, there is no doubt that the
business is benefitting from these changes: retention has improved by a significant margin and in the recent employment opinion survey we saw a
repeat of the high 74% engagement score seen in 2022, with 9% more colleagues participating (with 78.8% participating in aggregate).
• Feedback from the employee engagement survey reflected the following key themes: the value that colleagues put to the significant benefits
enhancements they had received in the year, leadership support and a positive culture, confidence in the Group, its business and its opportunity
for growth, pride in the services that we offer our customers, and recognition of the significant improvements in communications across the Group.
• The Employee Engagement Forum met quarterly during the year and discussed the significant progress the Group has made, including in reward,
learning and development, our apprenticeship programmes and supporting the mental health and wellbeing of our workforce.
Shareholders
and other
stakeholders:
• Our shareholders and other stakeholders have been extremely supportive of the decision making the Group has made in respect of our people,
given the long term benefits this has in business performance and shareholder returns.
• During the year, this support was reflected in both: (i) the votes for the 2022 Remuneration Report and the introduction of the Company’s new Share
Incentive Plan and International SIP; 98.85% and 99.99% respectively from our shareholders at the 2022 AGM; and (ii) an extensive shareholder
consultation exercise during Autumn 2022 and Spring 2023 (with 14 shareholder meetings, as well as engagement with proxy agencies) conducted
by John Pattullo, Remuneration Committee Chairman, to understand their views on our proposed new Remuneration Policy.
Looking ahead The Board continues to focus on our wider workforce and has approved salary increases for FY2024 on a similar basis to those in FY2023, with up to 7% increases for
colleagues at lower salary levels and a capped 3% increase at mid to senior levels, and intends to launch 2023 SAYE and Free Share programmes during FY2024. The Board
will propose the updated Remuneration Policy set out on pages 102 to 110 of the Directors’ Remuneration Report for approval by shareholders at the Company’s AGM on
26 September 2023.
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Section 172 statement continued
Decision: Growth and acquisitions
Strategic focus
and actions
supported by
the Board
In addition to the Group’s strong performance and growth in the year, the Board oversaw a number of acquisitions in the year. In addition to asset acquisitions of fleet
businesses and vehicles, the Group acquired Blakedale (on 2 July 2022) and FridgeXpress (on 2 May 2023, following a process largely undertaken in FY2023).
During the year the Board also reviewed the acquisition of ChargedEV and the Group’s Drive to Zero programme, as well as the strategic benefits this acquisition brought
through the introduction of EV expertise and EV market knowledge into the broader Group platform.
Stakeholder
considerations
and outcomes
Customers: • The Group’s acquisition of Blakedale, a specialist in supplying traffic management vehicles to highways infrastructure build and maintenance
operators, has provided the Group with a platform to expand its specialist service offerings to infrastructure firms and other customers.
• The Group’s acquisition of FridgeXpress, a leading provider of specialist temperature-controlled vehicles to a broad range of commercial customers
in the UK broadens Northgate Vehicle Hire’s range of specialist LCVs in the UK.
Suppliers: • As part of acquisitions of this nature, the Group reviews its relationships with providers of finance and suppliers, in order to ensure that we continue
to optimise our products and services in the most effective way for our customers.
Our people: • As part of both the Blakedale and FridgeXpress acquisitions, the employees of the respective businesses transferred to the Group, forming part of
our wider workforce, benefitting from our workforce development and reward programmes and becoming part of the team delivering services to
our customers.
Shareholders
and other
stakeholders:
• The acquisitions of Blakedale and FridgeXpress have integrated well into the Group with the Group seeing encouraging growth, including a growing
customer base and vehicle fleet since acquisition, and generating attractive returns for our shareholders.
• The Group is careful to manage its acquisition strategy, maintaining discipline and, as in ChargedEV, reevaluating the transactions following their
completion to review the subsequent business performance and allow us to build on learnings for future acquisitions.
Looking ahead The Board will continue explore opportunities for growth and strategic development as they arise, whilst maintaining appropriate financial and commercial discipline in
the consideration and execution of acquisitions.
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Decision: Capital allocation and financing
Strategic focus
and actions
supported by
the Board
The Group has maintained a conservative approach to capital allocation which has served us well, and leverage has remained well within our 1-2x target range, being
1.5x at 30 April 2023. The Board has declared an final dividend of 16.5p per share (FY2022: 15.0p) to be paid on 29 September 2023 to shareholders on the register as at
close of business on 1 September 2023 and including the interim dividend paid of 7.5p (2022: 6.0p) brings the total dividend for the year to 24.0p (2002: 21.0p), a 14.3%
increase on the prior year.
On 10 August 2022 the Board decided to extend its share buyback programme of the Company’s ordinary shares by a further £30m, bringing the maximum aggregate
consideration up to £60m.
The Board has also taken advantage of the Group’s strong fixed asset profile which is attractive to lenders. The Board approved the extension of our bank facility by an
additional 12 months to 2026 in October, providing further flexibility and duration to the Group’s borrowings, where 62% (£342m) of our total facilities are fixed and in
durations out to 2031.
Stakeholder
considerations
and outcomes
Finance
providers
• The Group’s financial profile allows us to maintain trusted relationships with the debt finance community, providing us with the financial flexibility
to operate and grow our businesses and strategic proposition.
Customers • Our firm financial management enables the Group to continue to provide both existing and new customers with a broader product offering, to
explore inorganic opportunities to grow our services and product suite and to be agile and responsive in a challenging economic environment,
particularly around fleet supply, benefiting the customers and communities in which we operate.
Shareholders
and other
stakeholders:
• In making these decisions, the Board took account of a number of shorter and long term considerations, including the interests of its shareholders,
customers, the capital that the Company would need to fund organic growth, payment of dividends in line with the Company’s dividend policy
and acquisitions within the M&A pipeline, as well as the Company’s substantial headroom under its facilities and target leverage of target leverage
of 1-2x net debt to EBITDA net debt to EBITDA.
Looking ahead The Board will continue to consider the appropriate use of capital for the Group and its stakeholders, taking into account the long term interests of the Group and all
of its stakeholders.
Section 172 statement continued
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Decision: Governance and sustainability
Strategic focus
and actions
supported by
the Board
During the year the Board made significant progress in the development of the Group’s sustainability strategy, putting ESG at the centre of the Group’s governance
programme. As part of this programme the Company issued its first Sustainability Report and formed an executive-led Sustainability Committee to oversee the Company’s
climate-related strategy and responsibilities and the development and setting of the Group’s Scope 1 and Scope 2 targets. The Group has made significant progress this
year highlighting the increasing prioritisation of this area by its stakeholders and the Group.
Stakeholder
considerations
and outcomes
All
stakeholders:
• Further information relating to the work of the Sustainability Committee and climate related responsibilities, including TCFD, can be found
in the sustainability section of this Annual Report on pages 52 to 70.
Looking ahead The Board will continue to develop its focus on the sustainability of its operations, promoting sustainability in step with the growth and development of the Group
as a whole.
Further information
Further information on the Board’s principal activities can be found in the governance section from page 77. In accordance with our duty to do so under Section 172(1) of the Companies Act
2006, the Board, individually and collectively, has acted in a way that it considers, in good faith, is most likely to promote the success of the Company for the benefit of its members as a whole.
The Strategic Report was approved by the Board on 5 July 2023 and signed on its behalf
by:
Martin Ward
Chief Executive Officer
Section 172 statement continued
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2023 Governance activities
• The Board has overseen the Group’s
strong performance and strategic
progress this year, including successful
acquisitions in the vehicle rental space
and the completion and extension of
the Group’s share buyback programme.
• Significant progress in the development
of our Group-wide sustainability and ESG
strategy including the implementation
and development of the Group’s
Sustainability Committee.
• The appointment of Bindi Karia and
Nicola Rabson as Non-Executive Directors
increased female representation on
the Board.
• The Group’s proposed new Directors’
Remuneration Policy will be put to
shareholders for approval at the 2023
AGM, following extensive consultation
with our shareholders.
• Significant support and benefits delivered
to colleagues across the Group in a
challenging economic climate, with a
greater focus on employee engagement
and the successful rollout of learning and
development programmes for our people
across all areas of the Group.
Our Board is committed to the sustainable and
responsible management of the Group’s businesses.”
Chairman’s introduction to governance
Dear stakeholder
On behalf of the Board, I am pleased to
present our Corporate Governance Report
for the year ended 30 April 2023. This section
of the Annual Report and Accounts outlines
the key areas of focus of the Board and its
activities during the year and highlights the
Company’s broader corporate governance
framework through which we build our
business and form our decisions. Our Board
is committed to the sustainable and
responsible management of the Group’s
businesses as we continue to drive long term
value creation for all our stakeholders.
Our strategy and performance
The Board has overseen the Group’s strong
performance and progress in delivering its
integrated mobility platform strategy this year,
despite ongoing supply chain challenges and
direct inflation seen most notably in areas
such as vehicle repairs. The Group’s strategy
has contributed to the Group’s diverse and
resilient customer and partner base with
multi-year service contracts in place,
providing a sustainable revenue stream and
opportunity for growth. The Board approved
a number of complementary acquisitions
during the year including Blakedale, a traffic
management specialist company, and
FridgeXpress, a leading provider of specialist
Avril Palmer-Baunack
Chairman
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temperature-controlled vehicles to a broad
range of commercial customers in the UK.
The Board also approved the extension of
the Group’s share buyback programme,
which was completed in December 2022,
and the interim and final dividend.
Board changes
I am delighted to welcome Nicola Rabson
to our Board as a Non-Executive Director,
following Bindi Karia’s appointment at the
beginning of the year. Nicola and Bindi
each bring significant breadth and diversity
of experience to our Board, together with
expertise that is highly relevant to the Group’s
strategy and corporate responsibilities. Nicola
is a well-known figure in the employment law
world, with particular focus on the social and
governance aspects of public companies,
and Bindi brings expert insight from the
innovation, digital and technology space.
Following the appointment of Nicola and
Bindi, the Board is now compliant with the
recommendations of the Parker Review and
has made significant progress towards its
target of meeting the Board diversity targets
as set out in Listing Rules LR 9.8.6R(9) and LR
14.3.33R(1), with women representing 37.5%
(2022: 14.5%) of the Board including the
Chairman. The 2022 FTSE Women Leaders
Review also reflected the progress the
Company made during the year with a
significantly higher positioning in the FTSE 250
and in our sector (with women comprising
37.5% of the Board (2021: 14.3%) and 34.7% of
senior management team and direct reports
(2021: 33.3%)).
The Board understands the importance of
diversity and inclusion. For further information
relating to diversity and inclusion, please see
the Nominations Committee Report.
Sustainability
We have made significant progress this
year in the development of our Group-wide
sustainability strategy, putting ESG at the
centre of the Group’s governance
programme thus ensuring the Group’s long
term success. As part of this programme the
Company issued its first Sustainability Report
formed an executive-led Sustainability
Committee to oversee the Company’s
climate-related strategy and responsibilities
and the development and setting of the
Group’s Scope 1 and Scope 2 targets. Our
Executive Board member, Philip Vincent,
has responsibility for oversight of our climate
change agenda and is Chairman of the
Sustainability Committee. Further information
relating to the work of the Sustainability
Committee and climate related
responsibilities, including TCFD, can be
found in the sustainability section of this
Annual Report.
Our people
Employee engagement
We are proud of the support and benefits
we have delivered to colleagues across
the Group this year in what has been a
challenging economic climate. This year,
our third annual colleague survey “Have
Your Say” demonstrated continued high
levels of employee engagement across
our workforce 74%, with a 9% increase
in colleagues completing the survey. Key
themes reflected the value that colleagues
put to the significant benefits enhancements
they had received in the year, leadership
support and a positive culture, confidence in
the Group, its businesses and its opportunity
for growth, pride in the service that we offer
our customers and significant improvements
in communication across the Group.
For further information relating to the
Employee Engagement Forum and employee
initiatives deployed by the Company see the
Directors’ Remuneration Report on pages
98 to 124.
Learning and Development
In FY2023, the Group created a central
Learning and Development team to drive
employee development and progression
in its UK business with significant success.
Key initiatives included:
• Extensive leadership training programmes for
people at different levels across the Group;
• A focus on our apprenticeship
programme to drive awareness and
update of this important initiative;
• Responsibly promoting future careers with
the Group to create awareness of the
opportunities the Group offers, including
to those in disadvantaged circumstances:
– Our Digital Early Careers event
connecting and broadcasting an
engaging and relatable early careers
story to 1,600 schools reaching 4,000
students;
– Signature of Youth Employment UK
Charter as a “Youth Friendly Employer”;
and
– Signature of the Care Leavers Covenant
which provides support for care leavers
aged 15 to 35, giving visibility of our
early careers opportunities to young
people who come from a care setting
and a direct link to the Learning and
Development talent team to discuss
our opportunities.
Wider workforce pay and benefits
In FY2023, the Company made significant
pay increases to colleagues at lower salary
levels (with increases between 9% and 12%,
and a capped 3% rise at mid to senior levels.
For FY2024 the Board has approved a further
4.2% average pay rise across the Group,
with higher increases for those colleagues
at lower salary levels and, once again,
a capped 3% rise at mid to senior levels.
Recognising the current cost-of-living and
inflationary pressures on our employees,
the Company made a one-off payment
of c.£250 to over 4,500 employees (which
represents 60% of total employees across
the Group) in December 2022 with a
further payment of £500 paid in April 2023
to 90% of our employees, as well as many
other initiatives.
The Group also delivered on its commitment
to help our employees invest in the Company
and promote their alignment with and
participation in the Group’s strategy, with
the launch of the Save As You Earn Scheme
in 2022 and the Group’s Free Shares
programme under which all employees
were provided with £500 of free shares in
the Company’s new share incentive plan
in December 2022 following approval by
shareholders at the 2022 AGM.
The Group also made significant progress
with its broader benefits. Colleagues on zero
hours contracts were offered permanent
contracts with improved benefits. We have
delivered improvements in other benefits
including: health and travel benefits,
maternity and paternity pay, bereavement
leave, paid emergency dependents leave,
alignment and enhancement of annual
leave and the Company car scheme
(which provides a wider selection of cars,
all of which are EV or hybrid).
Chairman’s introduction to governance continued
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Annual Report and Accounts 2023
We also introduced several Board-supported
initiatives to support the wellbeing of our people
from our UK employee assistance programme
to the introduction of mental wellbeing
apps to help with the prevention and
management of mental health issues.
Stakeholder engagement
The Board’s significant decisions during the
year, and its considerations in making them,
are set out on pages 72 to 76. They explain
how the Board’s decision making during
the year has promoted the success of the
Company having regard, amongst other
things, to those matters set out in Section 172
of the Companies Act 2006.
During 2023, we conducted an extensive
consultation exercise with our major
shareholders to understand their views on our
proposed new Remuneration Policy which
we will seek shareholder approval for at our
AGM in 2023 in line with the requirements of
Section 439A of the Companies Act 2006.
As a result, an updated Remuneration
Policy is being proposed to shareholders for
approval (by way of a binding vote) at the
2023 AGM. The updated Remuneration
Policy, which is proposed to apply for three
years from the conclusion of the 2020 AGM,
is set out on pages 102 to 110 of the Directors’
Remuneration Report.
Compliance with the UK
Corporate Governance Code
2018 (the Code)
The Company has complied with the
principles of the Code throughout the
financial year ended 30 April 2023 and to
the date of this report, and complied with
all provisions of the Code.
Board effectiveness
As Chairman, I am responsible for ensuring
that the effectiveness of the Board, its
committees and each individual Director
is evaluated annually. For 2023, an internal
evaluation process was carried out. The
outcome of the evaluation confirmed that
the Board and Committees continue to
operate effectively and that all of our
Directors continue to demonstrate
commitment to their role. Further information
relating to the Board evaluation can be
found on page 92 of the Nominations
Committee.
Avril Palmer-Baunack
Chairman
5 July 2023
Chairman’s introduction to governance continued
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Governance at a glance
Board of Directors gender
balance
Board independence
as at 30 April 2023
Non-Executive Director tenure
as at 30 April 2023
Board of Directors ethnicity
balance
1
Male: 5
Female: 3
Chairman
independent on
appointment
2 Executive
Directors
4 independent
Non-Executive
Directors
1 additional
Non-Executive
Director
0-3 years: 4
4-7 years: 1
7+ years: 1
White: 7
Ethnic Minorities: 1
Principles of the Code
1.
Board leadership and
Company purpose 86
Chairman’s introduction
to governance 77 to 79
Purpose, values and strategy 2 to 19
Culture 86
Board stakeholder engagement
and decision making 72 to 76
Key performance indicators
and strategic performance 28 and 29
Risk assessment 44
Risk management 43
Rewarding our workforce 99
2.
Division of responsibilities 82 and 83
Our Board and governance structure 81
Independence and time commitments 91
Committee reports 90 to 124
Board and committee meeting
attendance 89
3.
Composition, succession,
and evaluation 90 to 92
Our Board 84 and 85
Our Board and governance structure 81
Nominations Committee Report 90 to 92
4.
Internal control 89
Audit Committee report 93 to 97
Statement of Directors’
responsibilities 82 to 83
Principal risks and emerging risks 44 to 49
Going concern 146
Viability statement 50 and 51
5.
Remuneration 98 to 101
Directors’ Remuneration Report 102 to 124
1 Applying UK Office for National Statistics ethnicity
categories of: Asian; Black; Mixed/Multiple Ethnic
Groups; Other Non-White Ethnic Group, in
alignment with the UK Listing Rules.
Governance at a glance
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Governance structure and responsibilities
Governance structure
There is a clear and effective leadership structure in place at Redde Northgate. The Board has established three principal Board Committees to assist on the execution of its responsibilities.
These are the Audit Committee, Remuneration Committee and Nominations Committee. Each committee operates under its own terms of reference which are approved by the Board.
The terms of reference are reviewed annually and can be found on the Company’s website www.reddenorthgate.com.
Sustainability Committee
The Sustainability Committee was established this year;
its main area of responsibility is defining the Group’s
strategy relating to sustainability matters and is responsible
for governance over its sustainability programme and for
implementing the Group’s sustainability strategy.
Group Risk Committee
The Group Risk Committees assists the Board in its oversight
of the risk management framework and is designed to
identify, manage and mitigate the risks that the Group
faces in the operation of its businesses and the execution
of its strategy.
Board
The Board’s role is to ensure the long term sustainable success of the Group by setting our strategy through which value can be created and preserved for the mutual benefit of our shareholders,
customers, employees and the communities we serve. The Board provides rigorous challenge to management and ensures the Group maintains an effective risk management and internal control
system with oversight of the Group’s risk management processes and key risks.
The Group Management Boards
The Group Management Boards are responsible for the
day-to-day running of the business, carrying out and
overseeing operational management, and implementing
the strategies the Board has set.
Key Executive-led committees
Audit Committee
Provides independent assessment of the financial
affairs of the Company, reviews and provides oversight
of financial reporting controls. Responsible for reviewing
the effectiveness of the internal and external audit
processes. The Committee only comprises independent
Non-Executive Directors.
Report of the Audit Committee on pages 93 to 97
Remuneration Committee
Responsible for determining and approving the
Remuneration Policy and recommending to the Board its
approval. Responsible for setting the remuneration of the
Group’s Executive Directors, the Chairman, and the Group
Management Boards below Board level. Having regard to
pay across the workforce. Ensuring that workforce policies
and practices are aligned with the Company’s purpose,
values, and long term strategy. The Committee comprises
the Chairman and Independent Non-Executive Directors.
Report of the Remuneration Committee on pages 98 to 124
Nominations Committee
Responsible for keeping under review the skills and
experience of the Board and its committees; the
recruitment of new Directors; ensuring orderly succession
plans for both the Board and the Group Management
Boards; and overseeing the implementation of the Board
Diversity & Inclusion Policy The Committee comprises the
Chairman and Independent Non-Executive Directors.
Report of the Nominations Committee pages 90 to 92
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Responsibilities of those charged with governance
As at the date of this report, our Board comprised a Non-Executive Chairman, four Independent Non-Executive Directors, one additional Non-Executive Director and two Executive Directors.
There is a clear division between Executive and Non-Executive responsibilities, which ensures accountability and oversight. The roles of Chairman and Chief Executive are separately held,
and their responsibilities are well-defined and set out below. The Chairman and the other Non-Executive Directors meet routinely without the Executive Directors, and individual Directors
engage with senior management and other members of the Group’s workforce, during and outside Board meetings, in order to gain first-hand experience of our operations. The Board is
supported by the Company Secretary, to whom all Directors have access for advice. The table below summarises the key responsibilities of each of the director roles on the Board.
Governance structure and responsibilities continued
Individual Role
Chairman • Oversees Board responsibilities
CEO • Develops and executes the strategic plan
and manages risk
Senior Independent Director • Oversees governance procedures
Committee Chairman • Oversees Committee responsibilities
Non-Executive Director • Carries out Board responsibilities
Company Secretary • Facilitates effective operation of the
Board and Board Committees
Board Key focus
Responsibility:
• Monitoring progress against the strategy
of the Group and ensuring long term
success for the benefit of all stakeholders;
• Ensuring that adequate resources are
available so that strategic objectives may
be achieved through the annual planning
process and ongoing monitoring;
• Ensuring that the Group’s risk management
and internal control systems (both financial
and operational) are fit for purpose and
operating as they should be;
• Reporting to and maintaining
relationships with stakeholders;
• Compliance with laws and regulations
and good corporate governance;
• Dividend policy;
• Treasury policy;
• Insurance policy;
• Major capital expenditure;
• Acquisitions and disposals;
• Board structure; and
• Remuneration policy.
• Ensuring continued optimal integration
across the enlarged Group and
achievement of synergies.
• Embedding vision and values throughout
the Group.
• Ensuring execution of Group strategy by
executive team.
• Monitoring progress against strategic
objectives.
• Manage the Group’s growth through
strategic acquisitions; managing the
transition process as the business embeds
the Group’s governance framework,
financial reporting, risks, and internal
controls.
• Making recommendations to the Board
regarding setting and approving the
Group’s risk appetite.
• Review and approval of the Groups wide
risk assessment process.
Executive Directors Key focus
Responsibility: Delivery of the strategic plan
• Ensuring the Group strategy is executed
effectively via the Group Management
Boards;
• Monitoring Group performance;
• Managing the Group’s financial affairs; and
• Implementing the system of internal control.
• Achievement of integration and
synergies.
• Monitoring progress against strategic
objectives.
Group Management Boards Key focus
Responsibility: Delivery of the strategic plan
• Executing Group strategy and policies;
• Considering operational business issues;
• Reviewing risk reporting and taking
necessary actions; and
• Managing business performance.
• The Group Management Boards are
focused on the operational delivery
of the strategic plan, implementing
the strategy and developing strategic
opportunities to enhance the business.
Audit Committee Key focus
Responsibility: Delivery of the strategic plan
• Monitoring the integrity of financial
reporting on behalf of the Board,
including reviewing the work of Group
internal audit;
• Overseeing the statutory audit process,
monitoring quality of the audit process
and resultant findings and evaluating
auditor effectiveness;
• Monitoring independence and
objectivity, including monitoring auditor
rotation and developing a policy on
non-audit services provided;
• Approving auditors’ remuneration and
terms of engagement and making a
recommendation to the Board regarding
the appointment/reappointment of the
auditors on an annual basis; and
• Overseeing the audit tender process.
• Supporting the Board as they grow the
business through strategic acquisitions;
managing how the business embeds the
Group’s governance framework, financial
reporting, risks and internal controls.
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Governance structure and responsibilities continued
Remuneration Committee Key focus
Responsibility: Remuneration policy
• Assessing, reviewing and agreeing with
the Board the Remuneration Policy for
the Board and senior management
excluding the Non-Executive Directors;
• Assessing and reviewing the
Remuneration Policy and benefit structure
for Group employees; and
• Monitoring the share incentive plans
including participation and exceptional
circumstances and amending the design
of the plans in line with best practice.
• Setting appropriate targets for bonus
and long term incentive schemes having
regard to the long term value creation
objectives of the Group.
Nominations Committee Key focus
Responsibility:
• Reviewing the structure, size, skills and
experience of the Board and making
recommendations regarding any
changes;
• Considering succession planning for
Directors and other senior executives; and
• Making recommendations to the Board
for candidates to fill Board vacancies
when they arise or to fulfil the need for
additional Directors, normally using the
services of professional consultants in
the search.
• Reviewing the performance of the
Chairman and the Executive Directors.
• Implementing recommendations from
• the Board effectiveness review which was
conducted in the previous financial year.
• Reviewing succession plans to ensure the
Board can operate effectively and add
value to the Group.
The full terms of reference of the Audit, Remuneration and Nominations Committees can be
found on the Group’s corporate website: www.reddenorthgate.com
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Board of Directors
Avril Palmer-Baunack
Non-Executive Chairman
Nominations Committee Chairman
Joined Board August 2019
Key areas of expertise
Avril has more than 25 years’ experience
in leading businesses in the automotive
industry in a number of senior executive
and non-executive roles and was appointed
as Non-Executive Chairman in August 2019.
Current external appointments
Currently Executive Chairman of
Constellation Automotive Group.
Previous experience
Avril previously held roles as Non-Executive
Chairman of Quartix plc, Non-Executive
Chairman of Redde plc, Executive Chairman
of Stobart Group and Chief Executive Officer
of Autologic Holdings plc and of Universal
Salvage plc.
Philip Vincent
Chief Financial Officer
Joined Board July 2018
Key areas of expertise
Philip was appointed as CFO in July 2018. He
has extensive experience in senior finance
roles across a range of sectors worldwide.
Current external appointments
None.
Previous experience
Philip was previously Regional Finance
Director Asia Pacific of SABMiller plc and
before that he was the Group Director
of finance and control. Prior to SABMiller,
Philip held several senior positions at BBC
Worldwide, the largest commercial arm
of the BBC, including three years as Group
CFO and Board Director. Philip is a qualified
Chartered Accountant, having trained
with KPMG.
Martin Ward
Chief Executive Officer
Joined Board February 2020
Key areas of expertise
Martin was appointed to the Board as CEO
in February 2020 as the former CEO of Redde
plc, having been on the Board of Redde plc
since 2009 after joining a subsidiary of the
Group as Managing Director in 2005. Martin
has over 25 years’ insurance industry and
vehicle sector experience.
Current external appointments
None.
Previous experience
Martin jointly founded the Rarrigini & Rosso
Group in 1994, a leading independent
wholesale motor fleet, property and risk
management insurance business, which
was later acquired by THB plc in 2003.
Martin has an MBA from Durham University.
John Pattullo OBE
Senior Independent Director and
Remuneration Committee Chairman
Joined Board January 2019
Key areas of expertise
John was appointed to the Board as a
Non-Executive Director in January 2019,
Senior Independent Director in September
2019 and Chairman of the Remuneration
Committee in May 2022 and has a wide
range of experience in a number of
executive roles in the consumer goods and
logistics sectors and non-executive roles
across a range of other industries.
Current external appointments
None.
Previous experience
John was Chairman of V Group until
December 2020. Other previous non-
executive roles include Senior Independent
Director and Remuneration Committee
Chairman of Electrocomponents plc,
Chairman of NHS Blood & Transplant,
Chairman of Marken Logistics and Chairman
of In Kind Direct, a Prince’s charity. Chief
Executive Officer of Ceva Logistics Ltd
between 2007 and 2012. Before that, John
worked for Exel plc/DHL where he led the
EMEA logistics business and, prior to that,
held a number of senior global supply chain
appointments with Procter & Gamble.
A R N
The Directors of the Company who were in office at the date of signing the financial
statements are as noted within these pages.
Key
l Chairman of Committee
l Member of Committee
A Audit Committee
R Remuneration Committee
N Nominations Committee
N R
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Board of Directors continued
Mark McCafferty
Non-Executive Director
Joined Board February 2020
Key areas of expertise
Mark was appointed to the Board as a
Non-Executive Director in February 2020.
Mark had previously joined the Board of
Redde plc as Non-Executive Director in
March 2009, chairing the Remuneration
Committee for a large part of his tenure.
He brings extensive sector management
and commercial experience, having spent
six years as CEO of Avis Europe plc.
Current external appointments
Currently an adviser to CVC Capital Partners,
Chair of Warwickshire CCC and Non-
Executive Board Director of European
Professional Club Rugby.
Previous experience
Prior to Avis, Mark was Group Managing
Director of Thomas Cook’s global travel
and foreign exchange business and before
that spent seven years with Midland Bank
International in corporate finance and
international operations. He was CEO of
Premiership Rugby until July 2019. Mark
previously held non-executive directorships
with HMV Group plc, Umbro plc and
Horserace Totalisator Board (Tote).
Mark Butcher
Non-Executive Director and
Audit Committee Chairman
Joined Board September 2019
Key areas of expertise
Mark was appointed to the Board as a
Non-Executive Director and Chairman of
the Remuneration Committee in September
2019; since the Merger he has chaired the
Audit Committee. Mark has more than 20
years’ public company experience including
international accounting, corporate finance
and banking transactions, as well as sitting
on a number of public company boards.
Current external appointments
Currently a Non-Executive Director of
National Milk Records plc and Zytronic plc.
Previous experience
Non-Executive Director of AssetCo plc
from 24 October 2012 to 30 March 2023. Mark
has more than 20 years’ public company
experience working predominantly for
GPG (UK) Holdings plc, the UK investment
arm of Guinness Peat Group plc, where he
managed a significant proportion of group
investments.
Bindi Karia
Non-Executive Director
Joined Board May 2022
Key areas of expertise
Bindi was appointed to the Board as
a Non-Executive Director in May 2022.
Bindi brings deep experience in technology
and innovation having held senior board,
investment and advisory roles across the
technology ecosystem in Europe.
Current external appointments
Currently a Venture Partner at Molten
Ventures Plc, a European Technology
Venture Capital Fund. Bindi is also an
advisory board member of CognitionX,
Humanity Health and Wrisk Ltd and a World
Economic Forum member for the Digital
Leaders of Europe. Bindi also serves on the
University of East London Board of Governors,
where she is also Chair of the Ethics Advisory
Committee.
Previous experience
Bindi has previously held a variety of senior
technology roles, including as a Digital
Advisory Board member at The Very Group
and Centrica, as well as senior roles at Silicon
Valley Bank, Microsoft Ventures and PwC.
Nicola Rabson
Non-Executive Director
Joined Board November 2022
Key areas of expertise
Nicola was appointed to the Board as a
Non-Executive Director in November 2022.
Nicola is a well-known figure in the
employment law world with significant
experience advising public companies
and other clients on people issues and
governance, and on their strategic initiatives
such as those relating to diversity and
workplace culture.
Current external appointments
Nicola is a partner in the London office of
Linklaters LLP, a Trustee of the Global Media
Campaign to End FGM, a Governor at Royal
Russell School and Non-Executive Director
at Kent Football Association.
Previous experience
Nicola headed up the global employment
and incentives practice of Linklaters LLP from
2014 until 2021 and has also sat on Linklaters
LLP’s Remuneration Committee and London
Executive Committee. Nicola is qualified as
a solicitor in England and Wales and is a
CEDR accredited mediator.
A R N A R NA R N
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1. Board leadership and
company purpose
The Board’s ultimate objective is the long term
sustainable success of the Group. The Board
assesses the basis on which the Company
generates and preserves value over the long
term. Opportunities and risks to the future
success of the business have been considered
and addressed, contributing to the delivery
of the Group’s strategy. Information on this
can be seen throughout this Corporate
Governance Report, the Directors’ Report,
each of the Board Committee reports, the
Directors’ Remuneration Report and the
Strategic Report.
Section 172
The Board is committed in its duties in relation
to Section 172 of the Companies Act to
promote the success of the Company. The
Board seeks to understand the views of the
Company’s key stakeholders and how their
interests and the matters set out in Section
172 are considered in Board discussions and
decision making. A description on how the
Board has evidenced this is included in the
Section 172 statement on pages 72 to 76.
Workforce engagement
The Employee Engagement Forum which
is chaired by a senior member of the Group
Management Boards, helps the Board and
the Group Management Boards to
understand the views of the workforce and
to ensure feedback between the workforce
and the Board on an ongoing basis. This
provides the Board with in-depth insight into
how culture is embedded across our Group,
and any issues that need to be addressed.
The views of employees are measured
through an annual employee engagement
survey “Have your Say”, which is designed to
gauge how employees feel about the Group,
how well they understand its direction, and
their level of satisfaction and engagement
with their work. An analysis of the results of the
employee survey is presented to the Board.
See page 101 for more information regarding
workforce engagement.
How the Board monitors culture
The Board recognises that delivering for all
our stakeholders, in line with our purpose and
vision to be the leading supplier in mobility
solutions, is underpinned by our culture.
The Board regularly monitors the culture
of the business in a number of ways:
• Through interaction with executives,
members of the leadership team, and
other colleagues in Board meetings.
• Through regular Board agenda items
and supporting papers, covering culture
indicators such as risk management,
Group internal audit reports and follow-
up actions, customer engagement,
health and safety, whistleblowing,
modern slavery and regulatory breaches.
• Through receipt of reports from executives
on a range of indicators, including staff
engagement, retention, absence, gender
pay, diversity, and the results of employee
surveys.
During the year, the Board was satisfied that
the Company’s workforce policies practices
and behaviour were aligned with the
Company’s purpose, values, and strategy
and that no correction was required by
management. The Board reinforces our
culture and values through its decisions,
ensuring that decisions made are within
the approved risk appetite of the Group
and aligned with the Group’s strategy.
Shareholder engagement
Shareholders play a valuable role in
safeguarding the Group’s governance
through means such as annual re-election/
election of Directors, monitoring and
compensating Director performance and
constructive dialogue with the Board. Redde
Northgate engages actively with analysts
and investors and is open and transparent
in its communications. The Board is updated
regularly on the views of its shareholders
through briefings and reports from those who
have interacted with shareholders, including
the Directors and the Company’s brokers.
The Board and the Redde Northgate investor
relations team engage directly with investors
through a variety of communication
channels to ensure prompt and effective
communication:
• The AGM, which allows shareholders the
opportunity to engage with the Directors
and Chairmen of each of the Board
Committees.
• Presentations and briefings given by the
CEO and CFO, particularly at the time
of announcing the Company’s half year
and full year results.
• One to one meetings with institutional
shareholders on a regular basis by the
Chairman and Senior Independent
Director.
• CEO and CFO meet with shareholders
following six monthly results
announcements or in the intervening
period if necessary.
Corporate governance
UK premium listed companies are required by the FCA (the designated UK Listing Authority) to include a statement in
their annual accounts on compliance with the principles of good corporate governance and code of best practice,
being the UK Corporate Governance Code updated in July 2018. The provisions of the Code applicable to listed companies
are divided into five parts, as set out below:
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• Direct shareholder consultations when
considering matters of material impact
to the Group, such as consultation on
Remuneration report and policy, or
indirect engagement such as engaging
specialists to interview shareholders for
the development of our sustainability
strategy as outlined on pages 52 to 70.
• Annual and interim reports and results
presentations which are available to all
shareholders and also include the contact
details for the Company Secretary.
• Our corporate website, which has a
dedicated investor relations section and
contact details.
The Group’s results and other news releases
are published via the London Stock
Exchange’s Regulatory News Service or
another Regulatory Information Service.
In addition, these news releases are
published in the Investor Relations
section of the Group’s website at:
www.reddenorthgate.com
Shareholders and other interested parties
can subscribe to receive these news updates
by email by registering online via the website.
2. Division of responsibilities
The business is managed by the Board of
Directors. You can find more information
about the members of the Board on pages
84 to 85. An overview of the leadership of
the Group, including the responsibilities and
activities of each component, is outlined on
pages 80 to 83.
Information and communication
The Chairman ensures that all Directors
are appropriately briefed so that they
can discharge their duties effectively.
Management accounts are prepared and
submitted to the Board monthly. Before each
Board meeting appropriate documentation
on all items to be discussed is circulated.
The Company Secretary is available to the
Non-Executive Directors and can facilitate
Board training events whenever required.
The Non-Executive Directors meet without
the Executive Directors present and the
Senior Independent Director leads the
evaluation of the Chairman.
Each reporting segment of the Group
prepares monthly management accounts
which include a comparison against their
individual business plans and prior year
performance. Management reviews any
variance from targeted performance levels.
These commentaries are consolidated and
submitted to the Board. Year-to-date actuals
are used to guide forecasts, which are
updated regularly and communicated
to the Board.
Independence
Pursuant to those provisions of the Companies
Act 2006 relating to conflicts of interest and
in accordance with the authority contained
in the Company’s Articles of Association, the
Board has put in place procedures to deal
with the notification, authorisation, recording
and monitoring of Directors’ conflicts of
interest and these procedures have
operated effectively throughout the year
and to the date of signing of this Annual
Report and Accounts.
Following the Merger, Mark McCafferty
joined the Group Board. Prior to the Merger,
he had completed 10 years’ service on the
Redde Board. As Mark has served on the
Board for over nine years due to his previous
appointment on the Redde plc board as set
out in provision 10 of the Code this is a matter
that is relevant to the Board’s determination
of independence. Upon assessment against
this criteria, Mark McCafferty is not
considered to be independent.
The Board remains of the opinion that despite
Mark not being considered independent he
was objective throughout the year despite his
previous relationship with the Redde business
and that he continued to make thoughtful
and valuable contributions to the Board
and continued to constructively challenge
management and other members of the
Board as appropriate.
3. Composition, succession
and evaluation
The Nominations Committee report (pages
90 to 92) sets out its activities during the year,
including information on succession planning,
diversity, and inclusion. As previously noted,
Bindi Karia and Nicola Rabson joined the
Board during the year.
The Nominations Committee are confident
that the Board is equipped with the right mix
of skills and experience to deliver long term
strategic objectives. The Directors have
sufficient time to execute their duties. The
Committee met twice in the year satisfying
its terms of reference.
Diversity
Embracing diversity, in all its forms, enables
individuals to share their own perspectives
which promotes inclusivity and supports good
decision making by the Board. The board
recognises the many benefits of building a
diverse leadership team. The FTSE Women
Leaders Review, also reflected the progress
the Company made during the year. As a
Board we have made significant progress in
terms of increasing representation of women
on the Board which currently stands at 37.5%.
Whilst the Board recognises that the
representation of women on the Board does
not currently meet the UK Listing Rules target
of 40%, the Company notes the significant
progress made this year through the
appointment of Bindi Karia and Nicola
Rabson. For further information on the
Group’s approach to Board diversity please
see the Nominations Committee Report on
pages 90 to 92.
Corporate governance continued
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During the current year, the Directors have
reviewed the effectiveness of the Board as
a whole and its Committees and have
considered the results of the prior year
assessments. The Directors concluded that
the Board and its Committees continue to
operate in an effective and constructive way.
Areas of focus Recommendations Progress to date
Moving to
“business as usual”
Increase Board focus on risk appetite and critical areas such as IT,
and on medium and long term strategic debate.
The Board has assumed direct oversight of risk from the Audit Committee, and both broad/
sectoral and specific risks are regularly reported on and discussed at the Board.
Board learning
and development
Increased focus placed on learning and development across the
Group including at leadership level.
The Board during the year had specific training on ESG focusing particularly on the changing
regulatory and governance landscape as well as presentations on strategic matters. The
Board also made a visit to the Company’s operations in Spain.
Succession
planning
The Board recognises the importance of succession planning and
maintaining a continued focus on diversity and inclusion on the
Board and more widely in the Group’s businesses.
Significant progress has been made at Board and senior management level in meeting the
diversity levels expected of a Group of our size and nature, not least with the two Board
appointments conducted throughout the year.
Corporate governance continued
Board evaluation
A Board effectiveness review is carried out
annually in line with the Code, with a review
being externally facilitated every three years.
The last external Board effectiveness review
was carried out in FY2021. This year the Board
effectiveness review was conducted
internally, supported by the Company
Secretary. The external Board effectiveness
review was conducted based on a framework
established by the external Board evaluation
conducted by Korn Ferry in FY2021. Next year
the Board will be required to conduct an
external Board effectiveness review.
Key areas of focus from this year’s internal
Board effectiveness review are set out in
the table below.
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Attendance
Directors’ attendance at Board and Committee meetings during the year is detailed as follows:
No. of meetings
Board
10
Audit
4
Remuneration
6
Nominations
2
Avril Palmer-Baunack* 10 4 6 2
Martin Ward** 10 4 ***5 ***2
Philip Vincent** 10 4 ***5 ***2
John Pattullo 10 4 6 2
Mark Butcher 10 4 6 2
Bindi Karia 10 4 6 2
Mark McCafferty** 10 4 ***5 ***2
Nicola Rabson**** 5 2 ***2 ***2
* By invitation when attending Audit Committee.
** By invitation when attending Committees.
*** Only meetings to which invited.
**** Nicola Rabson was appointed to the Board and to the Audit, Nominations and Remuneration Committee on
9 November 2022.
Corporate governance continued
The external auditors and the Group Head of
Internal Audit attended all Audit Committee
meetings.
4. Audit and internal control
The Audit Committee report on pages 93 to
97 describes the work of the Committee and
how it discharges its roles and responsibilities.
The Board is accountable for the Group’s
success and dealing with the challenges
it faces. The Board reviews the results, risks
and opportunities facing the Group. The
Audit Committee plays a key part in this
work, monitoring and evaluating the
Group’s processes and internal controls and
providing a layer of independent oversight
over our key activities.
The Group’s systems of risk management and
internal control ensure that our businesses
operate within risk appetite levels approved
by the Board. These are set out in the
Identifying and managing risk report from
page 40.
Internal control
Although no system of internal controls can
provide absolute assurance against material
misstatement or loss, the Group’s own system
is designed to provide the Directors with
reasonable assurance that, should any
problems occur, these are identified on a
timely basis and dealt with appropriately.
Confirmation that the Board has performed
an assessment of the risk management and
internal control systems of the Group, as
required by the Code, is contained in the
Identifying and Managing Risk Report on
pages 40 to 49.
5. Remuneration
The Directors’ Remuneration Report on
pages 98 to 124 describes the work of the
Committee during the year. It sets out how
executive remuneration is aligned to the
Company’s purpose, values and strategy.
It also shows how workforce remuneration
and related policies have been considered
in its decision making regarding executive
remuneration.
Compliance with the Code
The Company is subject to the principles and
provisions of the UK Corporate Governance
Code 2018 (the Code), a copy of which is
available at www.frc.org.uk.
Following the appointment of Bindi Karia on
6 May 2022, the Group was compliant with:
• Provision 11 of the Code, for at least half
of the Board to be independent.
• Provision 17 for the Nominations
Committee to be comprised of at least
three independent Non-Executive
Directors.
• Provision 24 for the Audit Committee to be
comprised of at least three independent
Non-Executive Directors.
• Provision 32 for the Remuneration
Committee to be comprised of at least
three independent Non-Executive
Directors.
In addition, effective from 1 January 2023,
Executive Directors’ pensions were aligned
to the wider workforce.
In April 2023, the Group consulted with the
Employee Engagement Forum on the Group’s
approach to wider workforce remuneration
and on how executive remuneration aligns
with wider Group pay policy.
For the year ended 30 April 2023, the Board
considers that it has applied the principles
and complied in full with the provisions of
the Code.
James Kerton
Company Secretary
5 July 2023
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Report of the Nominations Committee
Dear stakeholder,
I am pleased to present the Report of the
Nominations Committee (the Committee)
for the year ended 30 April 2023. As a
committee our core responsibilities include
promoting diversity and inclusion, reviewing
the structure of the Board and its committees,
recommending new Board appointments,
and ensuring adherence to formal, rigorous
selection, appointment and induction
processes for new directors.
Committee purpose
The Committee assists the Board in reviewing
the structure, size, skills and experience of
the Board. It is also responsible for reviewing
succession plans for the Group Directors,
including the Chairman and the CEO and
other senior executives. The Committee’s
role, authority, responsibilities and scope are
set out on pages 81 to 83 and in detail in its
terms of reference which are available on
the governance section of our website.
Operation of the
Nominations Committee
The Committee keeps the overall structure,
size and composition of the Board under
continuous review, and is responsible for
evaluating the balance of skills, knowledge
and experience of the Board and its
committees.
Board recruitment
As reported in our 2022 Annual Report
and Accounts, the Committee appointed
Bindi Karia in May 2022. Nicola Rabson was
appointed in November 2022. Bindi has
brought significant expertise and focus
on technology and innovation. Nicola is a
partner in the London office of Linklaters LLP
and was global head of Linklaters LLP’s
employment and incentives group from 2014
to 2021. Nicola brings significant experience
in advising public companies and other
clients on people, governance and
workplace culture. In addition, John Pattullo,
our Senior Independent Director, took on
the responsibility of Chairman of the
Remuneration Committee in addition to
his existing role, and the Board has greatly
benefitted from his leadership in our activities
in this area, including our extensive
shareholder engagement on our proposed
Remuneration Policy for 2023.
The recruitment process involved in
appointing a new Non-Executive Director,
generally involves the Committee preparing
a description of the role and the attributes
required in the candidates, which will include
a job specification and an estimate of the
time commitment expected. The Committee
then compiles a shortlist taking account of
known candidates and candidates
suggested by the Group’s Board, advisers
and/or appointed recruitment consultants.
The appointment process takes account of
the benefits of diversity of the Board, including
gender diversity, and in identifying suitable
candidates, the Committee considers
candidates from a range of backgrounds.
The Committee oversees succession planning
for Directors and senior management, as well
as broader consideration of the leadership
needs of the business and senior
management development.
Avril Palmer-Baunack
Committee Chairman
Committee membership
The members of the Committee are shown in the table below.
Details of their experience and qualifications are shown on
pages 84 to 85.
Committee membership Number of meetings
Avril Palmer-Baunack 2/2
Mark Butcher 2/2
Bindi Karia 2/2
John Pattullo 2/2
Nicola Rabson (joined the
Committee on 9 November 2022)
2/2
I am delighted to welcome Nicola to the Board.
Nicola is a well-known figure in the employment
world and brings significant experience to the Board.”
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Following the appointment of Nicola and
Bindi, the Board is now compliant with the
recommendations of the Parker Review and
has made significant progress towards its
target of meeting the Board Diversity Targets
as set out in Listing Rules LR 9.8.6R(9) and LR
14.3.33R(1), with women (including myself as
Chairman) representing 37.5% (2022: 14.5%)
of the Board.
Induction
Given the strategic breadth and focus
of the Group’s activities, the Group carries
out extensive inductions for its new Non-
Executive Directors. Bindi Karia and Nicola
Rabson received a tailored induction that
focused on the Group’s, stakeholders,
strategy, structure, operations and
governance. Both directors met the Board
collectively and on a one-to-one basis.
In addition, Bindi and Nicola attended a
strategy briefing day at the Company’s head
offices in Darlington, where they received
presentations from senior leaders from the
business and had the opportunity to meet
colleagues more widely. In addition, during
the year, both new Directors have received
appropriate briefings from the Group’s
advisers on the Group’s regulatory and
governance landscape and their legal
and regulatory responsibilities. In addition,
Bindi and Nicola held meetings with other
Directors, the Company Secretary and
members of the Group Management Boards
and other senior leaders to discuss the
Group’s strategy (including with respect to
sustainability, business, operations and risks).
Independence of the
Non-Executive Directors
During the year, the Committee considered
the tenure and independence of existing
Non-Executive Directors, and whether a
Director’s length of service had in any way
impacted his or her ability to remain
independent in character and judgement
in performing his or her duties. The Board
considers all the Non-Executive Directors
except for Mark McCafferty and the
Chairman whose independence was not
assessed, but who was independent on
appointment, to be independent of
management and free from any business
or other relationship which could materially
interfere with their ability to exercise
independent judgement.
In accordance with the results of the
independence assessment, and in line with
the requirements of the Code, all Directors
will retire at this year’s AGM and, submit
themselves for re-appointment (appointment
in respect of Nicola Rabson) by shareholders.
Biographical details of the Directors,
including their skills and experience,
can be found on pages 84 to 85.
Board diversity
The Board considers that its composition
should be designed to ensure it has the best
experience and skills to advance the Group’s
strategy for the benefit of all its stakeholders,
and that as part of this the benefits of all
aspects of diversity should be considered,
including, but not limited to, gender and
ethnicity. The Group maintains an
appropriate diversity and inclusion policy
for all of its workforce, including our senior
management and the Board. Accordingly,
the Committee will consider candidates on
merit against objective criteria, with regard
to the benefits of diversity when identifying
suitable candidates for appointment to the
Board. The Board is also committed to
operating in a way that supports diversity
and inclusivity including ensuring appropriate
consideration of diversity and inclusion in
succession planning at senior management
and Board level. When searches for an
appointment to the Board are conducted
by the Company with external search firms,
these firms will identify and present a list of
qualified potential candidates, including
having regard to diversity.
As at 30 April 2023, one of the senior positions
on the Board was held by a woman, The
Board included one Director from an ethnic
minority background and the representation
of women on the Board was 37.5% (this
remains the case as at the date of this
Annual Report and Accounts). Whilst the
Board recognises that the representation
of women on the Board does not currently
meet the UK Listing Rules target of 40%, the
Company notes the significant progress
made this year through the appointment of
Bindi Karia and Nicola Rabson and the need
to maintain a balance of experience and
continuity on the Board. The Nominations
Committee and the Board, whilst mindful
of the targets set by the Listing Rules, will
continue to make appointments based
on merit having regard to diversity.
Report of the Nominations Committee continued
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Report of the Nominations Committee continued
Gender representation for Board and senior management as at 30 April 2023
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chairman)
Number in
executive
management
1
Percentage
of executive
management
Men 5 62.5 3 12 75
Women 3 37. 5 1 4 25
Ethnic background of Board and executive management as at 30 April 2023
Number
of Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chairman)
Number in
executive
management
1
Percentage
of executive
management
White British or other
(including minority-
white groups)
7 87. 5 4 16 100
Asian/Asian British 1 12.5
1 Executive management includes the Group Management Boards (most senior executive bodies below the Board)
and the Company Secretary, excluding administrative and support staff, as defined by the UK Listing Rules.
Gender and ethnicity data relating to
the Board, Group Management Boards
and Company Secretary is collected on an
annual basis applying a standardised process
managed by the Company Secretary and
the Group’s HR functions. Each Board
member, Group Management Board
member and the Company Secretary is
requested to confirm, on a strictly confidential
and voluntary basis, their ethnicity and
gender identity (or specifies they do not
wish to report such data). The criteria of the
standard form questionnaire are fully aligned
to the definitions specified in the UK Listing
Rules, with individuals requested to specify:
(1) Self-reported gender identity. Selection
from (a) male; (b) female; (c) other category/
please specify; (d) not specified (due to local
data privacy laws); or prefer not to say.
2) Self-reported ethnic background
(classifications as designated by the UK
Office of National Statistics). Selection from:
(a) White British or other white; (b) Mixed or
multiple ethnic groups; (c) Asian or Asian
British; (d) Black; (e) Other ethnic group/
please specify (f) not specified (due to local
data privacy laws); or prefer not to say.
Board and committee evaluation
and continuing training
The Board also conducted its annual
evaluation process, which demonstrated
the significant and continuing effectiveness
of the operation of the Board as well as its
committees (including the Nominations
Committee). The evaluation was conducted
based on a framework established by the
external Board evaluation conducted by
Korn Ferry in FY2021 and reflect the Board’s
view that it is a strong and cohesive body,
as a main Board and across its committees,
with a clear view of its purpose and values.
The further enhancement of the Board’s
composition and balance of skills,
experience and capabilities following
the appointment of Bindi and Nicola
was reflected very clearly in feedback.
In October the Board visited the Group’s
offices and operations in Madrid. This
provided the Board with an opportunity to
view first-hand the high calibre of the Group’s
operations in Spain, including innovative
initiatives, and the breadth and quality of our
commercial proposition in Spain. In addition,
the Board were able to spend time meeting
the Spanish leadership team and discussing
the Group’s strategy with them.
During the year, the Board has had an
increasing focus on sustainability, as part of
the development of the Group’s sustainability
strategy, and in the form of specific training
from its external advisors. The Board has also
received strategy presentations on a variety
of the Group’s current and future initiatives
including those relating to the expected
future transition of the fleet away from
non-ICE vehicles.
Future priorities
In FY2024, the Committee intends to continue
reviewing succession plans for the Board to
make sure the Board continues to operate
effectively and add value to the Group.
Avril Palmer-Baunack
Chairman
5 July 2023
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Report of the Audit Committee
Ensuring the integrity of the
Group’s financial reporting
Dear stakeholder,
On behalf of the Audit Committee (the
Committee) and the Board, I am pleased
to present the report of the Committee for
the year ended 30 April 2023. The objective
of this report is to provide an understanding
of the work undertaken by the Committee
during the year to ensure that the interests
of the Company’s stakeholders are
protected through a robust system of internal
controls, risk management and transparent
financial reporting.
The report explains the role the Committee
plays in the Group’s governance framework
by supporting the Board in the Board’s
assessment of the integrity of the Company’s
financial reporting and the adequacy and
effectiveness of the Company’s
management of risk and internal controls.
The Board recognises the importance of risk
management; therefore, the setting of risk
appetite and the review of the risk register
are carried out by the Board. The Committee
continued to focus on its core areas of
responsibility, namely protecting the interests
of the Group, our shareholders and
stakeholders through ensuring the integrity
of the Group’s financial information, audit
quality and the effectiveness of internal
controls throughout the year.
Role
The Committee’s role, authority,
responsibilities and scope are set out on
pages 81 to 82 and in detail in its terms of
reference which are available on the
Governance section of our website:
www.reddenorthgate.com
Meetings
The Committee is required to meet at least
three times a year. Details of attendance at
meetings held in the year ended 30 April 2023
are detailed in this report. Due to the cyclical
nature of its agenda, which is linked to events
in the Group’s financial calendar, the
Committee met four times during the year. The
other Directors, together with the Group Head
of Internal Audit and the external auditors,
are commonly invited to attend all meetings.
Key focus
The Committee continues to support the
risk management framework of the Group
through regular review of internal controls
and oversight of the work of internal audit.
The Committee reviewed management’s
assessment of the viability of the Group and
the period over which viability should be
assessed taking into consideration the
impact of the economic environment,
climate change and downside sensitivities,
challenging those assumptions. The
Committee is satisfied that the Group is
viable, with further details provided within the
viability statement found on pages 50 to 51.
Mark Butcher
Chairman of Audit Committee
Committee membership
The members of the Audit Committee are shown below:
Committee membership Number of meetings
Mark Butcher 4/4
Bindi Karia 4/4
John Pattullo 4/4
Nicola Rabson (joined the
Committee on 9 November 2022)
2/4
The Code requires that at least one member of the Audit
Committee (the Committee) should have recent and relevant
financial experience. Currently, the Chairman of the Committee
fulfils this requirement. All members of the Committee are
expected to be and are financially literate. The Committee
is composed of independent Non-Executive Directors
with relevant experience and proficiency in line with the
requirements of the Code and the Committee’s terms of
reference. Relevant information on the skills and experience
of our Board members is outlined on pages 84 to 85.
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Report of the Audit Committee continued
During the year, the Committee has given due
consideration to the continuing uncertainties
surrounding supply chain restrictions and the
impact that these may have on residual
values of used vehicles, the ageing of the
fleet, and the cost of new vehicles. Such
factors are important variables in the
determination of appropriate depreciation
rates for vehicles available for hire.
The Committee challenged and debated
management’s assessment of future residual
values, and whilst acknowledging that this
is a significant area of judgement, the
Committee agreed with management’s
proposals with respect to the depreciation
rates on the existing fleet and for new
vehicle purchases.
As outlined in the prior year, depreciation
rates have been reduced on a component
of the fleet from May 2022 in response to the
high residual values in the short to medium
term period.
The approach towards assessing depreciation
rates on new purchases has been consistently
applied. This requires management to set
depreciation rates based on their assessment
of future residual anticipated at the point
of disposal.
The Committee reviewed the judgements
involved in management’s assessments of
potential indicators of impairment of assets
and the recoverable amounts of each cash
generating unit which contained indefinite
lived assets. After due consideration, the
Committee agreed with management’s
assessment of the recoverable amount of the
NewLaw cash generating unit and agreed
with the proposal to impair the value of
certain assets of that business.
Following recent acquisitions, the Committee
has reviewed management’s assessments of
the fair values of net assets acquired and
also continues to support the embedding of
the Group’s governance and internal control
frameworks within those businesses.
During the year, the FRC reviewed the
financial statements for the year ended
30 April 2022. The FRC’s review is limited in
scope with no detailed knowledge of our
business and no reliance should be placed
on the findings of their review. The review
highlighted that the impairment of trade
receivables should be disclosed as a
separate line item on the income statement
which has been adjusted in the accounts for
year ended 30 April 2023, including a prior
year adjustment.
The Committee reviewed and recommended
the Board approve the Group’s tax strategy
and considers that this demonstrates the
Group’s commitment to tax transparency
and its stated desire to pay the right amount
of tax.
Activity
Since May 2022, the Committee has:
• reviewed the financial statements for the
years ended 30 April 2022 and 2023 and
the half yearly report issued in December
2022. As part of this review process, the
Committee received reports from PwC;
• reviewed and agreed the scope of the
audit work to be undertaken by PwC
and agreed its fees;
• reviewed and confirmed endorsement
of the Group’s non-audit fee policy;
• reviewed the effectiveness of external
audit and made a recommendation to
the Board on the reappointment of PwC
as the External Auditor.
• had discussions with the external audit
partner in the absence of management;
• reviewed the effectiveness of the Group’s
system of internal controls;
• set the programme of internal audits;
• received regular reports from the Group
Head of Internal Audit;
• reviewed and approved the Internal Audit
Charter,
• reviewed the quality and effectiveness
of Internal Audit;
• had discussions with the Group Head
of Internal Audit in the absence of other
management;
• reviewed the progress made by
management in implementing the
internal control improvements
recommended by Group Internal Audit;
• reviewed the Group’s corporate taxation
arrangements and recommended that
the Board approve the Group tax
strategy;
• reviewed the Group’s treasury
arrangements and policies;
• reviewed the findings of the FRC’s review
of the Group’s financial statements for the
year ended 30 April 2022, and overseeing
actions taken to address the
recommendations proposed in that review;
• reviewed the Group’s depreciation policy
and depreciation rates adopted within
this policy;
• reviewed a management paper
considering classification of items as
exceptional within the income statement;
• reviewed a management paper on the
accounting considerations of the
recoverability of contract assets within
Redde;
• reviewed a management paper on the
accounting considerations of impairment
of assets;
• reviewed a management paper on
the accounting judgements made with
respect to the fair value assessment
of acquisitions;
• reviewed and approved the Group’s
“Fair, Balanced and Understandable”
statement;
• reviewed management’s assessment
of going concern and viability; and
• reviewed and approved the Committee’s
terms of reference, prior to making a
recommendation to the Board.
Significant matters considered in
relation to the financial statements
During the year the Committee reviewed
the significant matters set out in this report in
relation to the Group’s financial statements
for the year ended 30 April 2023. We
discussed these issues at various stages with
management during the financial year and
during the preparation and approval of the
financial statements.
Following review and consideration of
the presentations and reports presented
by management, we are satisfied that the
financial statements appropriately address
the critical judgements and key estimates,
in respect of both the amounts reported
and the disclosures made. We also reviewed
these issues with the auditors during the audit
planning process, the interim review and at
the conclusion of the year end audit. We are
satisfied that our conclusions in relation to
these issues are in line with those drawn by
the auditors.
Risk management
The Committee is responsible for overseeing
the adequacy of internal controls and the
work of Group Internal Audit.
The Board determines the extent and nature
of the risks it is prepared to take in order to
achieve the Group’s strategic objectives.
Further information on the Group’s risk
management processes can be found on
pages 40 to 49.
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Report of the Audit Committee continued
Internal financial controls
On an ongoing basis, the Audit Committee
reviews the adequacy and effectiveness
of the Group’s system of internal financial
controls, which are described briefly in the
table on this page.
The Committee received detailed reports on
the operation and effectiveness of the internal
financial controls from members of the senior
management team. The outcome of the
external audit at year end and the half year
review are considered in respect to our internal
controls. The Committee also receives updates
on the policies and procedures in place and
how these are being communicated to and
complied with by our staff.
Overview of internal financial controls
Governance framework Our governance framework supports effective internal control through an approved schedule of matters
reserved for decision by the Board and the Group Management Boards, supported by defined
responsibilities, levels of authority and supporting committees.
Financial review and
internal procedures
Comprehensive systems of financial reporting and forecasting which are conducted frequently and include
both sensitivity and variance analysis. A budgeting exercise and strategic review is conducted annually.
Sensitivity analyses are included in both the strategic review and the rolling forecasts.
Tax and Treasury procedures Taxation is a complex area and is subject to frequent external review. Regular oversight of tax governance
is provided by the Committee, covering implementation of the Group’s tax strategy, compliance, and all
significant commercial transactions. We maintain an open relationship with HMRC and have a “low risk”
tax status.
The Treasury function ensures compliance with Group treasury policies set by the Board and reviewed by
the Committee which cover liquidity risk, credit risk, interest rate risk, foreign exchange risk and capital
management. Liquidity policy includes continual monitoring of the Group’s debt facilities to ensure sufficient
access to capital. All complex or large transactions are discussed in advance with the Board.
Risk management The Board regularly reviews the Group’s risk register, the schedule of key controls and key risk indicators. The
Board also assesses the impact of emerging risks to the Group. Our risk management procedures are robust
and can be viewed on pages 40 to 49.
External verification During the year, no significant deficiencies had been raised by PwC through the course of the annual audit
nor through the work carried out by Group Internal Audit and overseen by the Committee.
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Significant financial judgements, key assumptions and estimates
Any key accounting issues or judgements made by management are monitored and discussed with the Committee throughout the year. The table below provides information on the key
issues discussed with the Committee during the year and the judgements adopted.
Matter Key consideration Progress to date Conclusion
Determining appropriate
depreciation rates for
vehicles available for hire
Ensuring that depreciation
rates are set appropriately.
The Committee reviewed trends of vehicle residual values on a regular basis.
In addition, we reviewed papers prepared by management at each
reporting date which included a quantitative and qualitative assessment of
the current and forecast trends in the used vehicle market, management of
group fleet and review of the Group’s depreciation policy and accounting
estimates against that backdrop.
We challenged and debated the assumptions and judgements made and
were content with managements assessment.
We agreed with management’s assessment
of depreciation rates to be applied to the
existing fleet and their proposal for
depreciation rates on new vehicle purchases
to be applied in FY2024.
Claims due from insurance
companies and self-insuring
organisations
Ensuring that the carrying
value of insurance claims
represents the best estimate
of the net claim value to be
recovered.
At each reporting date the Committee reviewed papers prepared by
management at each reporting date which included management’s
assessment of the expected net claim values at each reporting date.
We challenged the underlying assumptions and significant areas of
judgement and were satisfied with management’s assessments.
We concluded that the judgements made
in determining net claim values as at 30 April
2023 were appropriate.
Impairment of assets Ensuring that the
recoverable amount of
assets held on the balance
sheet are in excess of
carrying values.
The Committee reviewed a paper prepared by management considering
indicators of impairment of assets. The paper also outlined assumptions made
in the calculation of the recoverable amount for each cash generating unit
(CGU) which included indefinite lived assets.
We challenged the assumptions made and were satisfied with
management’s assessments.
We agreed with managements assessment
that assets held on the balance sheet are
not impaired, with the exception of the
NewLaw CGU.
We reviewed management’s calculation of
the recoverable amount of the NewLaw CGU
and agreed with the accounting impairment
included within the financial statements.
Financial statements
and other information
Fair and balanced
presentation of financial
statements and other
information including use
of appropriate alternative
performance measures.
The Committee considered the presentation of the financial statements,
including the presentation of reported results between underlying and
statutory performance, as well as evaluating how financial results and
alternative performance measures were used as part of the Strategic report.
The Committee reviewed papers prepared by management at each
reporting date which outlined management’s judgement in assessing
whether any items should be classified as exceptional items or otherwise
excluded from underlying results to ensure that the judgements made were
reasonable and were in line with stated policy.
We concluded that the Annual Report
and Accounts, taken as a whole, were fair,
balanced and understandable, and that the
usage of alternative performance measures
was appropriate.
Report of the Audit Committee continued
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Report of the Audit Committee continued
External auditors
The Committee reviews and makes
recommendations regarding the appointment
of the external auditors. In making this
recommendation, we consider auditor
effectiveness and independence including
consideration of non-audit fees and length
of tenure of audit firm and lead partner.
The Committee confirmed compliance
with the Statutory Audit Services for Large
Companies Market Investigation (Mandatory
Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014,
having last carried out a competitive tender
and appointed PwC as Group auditors in
2015. Jonathan Greenaway had been the
lead audit partner since the year ended
30 April 2022, following the rotation of the
previous partner. The Company is required
to have a mandatory audit tender after 10
years and, as the Audit Committee considers
the relationship with the auditors to be
working well and remains satisfied with their
effectiveness and the quality of audit work,
their geographical and professional
capabilities, the Audit Committee does not
currently anticipate that it will conduct an
audit tender before it is required to do so in
2025. The Committee will continue to monitor
this annually to ensure the timing for the
audit re-tender remains appropriate,
taking into account the effectiveness
and independence of the auditors.
The Committee ensures that non-audit work
may only be undertaken by the external
auditor in limited circumstances. All non-
audit services are subject to the Committee’s
prior approval. Non-audit services provided
by our external auditors are subject to a cap
equal to 70% of the average annual audit
fee for the preceding three years.
Non-audit fees for services provided by PwC
for the year amounted to £62,000 related to
the review of the interim financial statements
as required by regulation. As this work was
required by legislation there were no
non-audit services conducted for the
purposes of comparison to the 70% cap
included in the FRC’s guidance.
The Committee reviewed the effectiveness
and independence of the external auditors,
both in terms of the engagement team and
the firm as a whole. In order to perform this
assessment, the following criteria are
considered:
• the auditor’s safeguards to
independence including the
independence letter which annually
confirms their independence and
compliance with the FRC Ethical
Standard;
• the operation, and compliance with,
the Group’s policy on non-audit work
being performed by the auditors;
• how the auditors identified risks to audit
quality and how these were addressed,
including the controls the auditors relied
upon;
• the quality of the audit plan including
identification of key risks, materiality
assessment and scope of Group audit;
• how the auditors demonstrated
professional scepticism and challenged
management’s assumptions where
necessary; and
• the outcome of the FRC’s inspection
of PwC’s audit quality.
In assessing how the auditors demonstrated
professional scepticism and challenged
management’s assumptions, the Committee
considered the depth of discussions held
with the auditor, particularly in respect to
challenging the Group’s approach to its
significant judgements and estimates.
The Committee is satisfied with the level of
challenge raised by the audit partner and
the team during the year.
The Committee concluded that the
audit process was operating effectively.
Consequently, the Committee has
recommended the reappointment of PwC
as the Group’s external auditor at the AGM
in September 2023.
Group Internal Audit
In fulfilling its duty to monitor the
effectiveness of the Internal Audit function,
the Committee has:
• reviewed the adequacy of the resources
of the Group Internal Audit department;
• ensured that the Group Head of Internal
Audit has direct access to the Chairman
of the Board and to all members of the
Committee;
• conducted a one-to-one meeting with
the Group Head of Internal Audit without
management present; and
• approved the Group Internal Audit
programme and reviewed quarterly
reports by the Group Head of Internal
Audit, ensuring the Committee was
satisfied with the quality of these reports.
The Committee concluded that the Group
internal audit process had been conducted
effectively and that the quality of audit and
reporting was rated highly.
Looking forward
In FY2024, the Committee will continue to
support the Board as the business continues
to grow organically and inorganically,
embedding the Group’s governance
framework, financial reporting systems, risk
management processes and internal controls.
Mark Butcher
Chairman of Audit Committee
5 July 2023
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Introduction to Remuneration report
Dear stakeholder,
I am very pleased to introduce the Directors’
Remuneration Report for the year ended
30 April 2023. This is my first full year chairing
the Committee, and I am joined on the
Committee by Mark Butcher, Bindi Karia,
Nicola Rabson and our Chairman, Avril
Palmer-Baunack.
The Group delivered strong trading and
financial performance in the year to 30 April
2023, continuing the successful execution
of our strategy to become a leading provider
of integrated mobility solutions. This progress
has been acknowledged by shareholders
and Redde Northgate has significantly
outperformed the FTSE 250 index since
the acquisition of Redde by Northgate
in February 2020.
Since the beginning of FY2023, we have
generated significant shareholder value
through successful acquisitions of specialist
businesses in the vehicle rental space and
by completing a £60m share buyback
programme. The Group has also broadened
our vehicle supply channels to ensure that
we can continue to provide a sustainable
and attractive offering to customers. In
addition we have made material progress
with our Group-wide sustainability and ESG
strategy and governance. We have also
made successful appointments to our Board,
enhancing expertise, capabilities and
diversity.
Most importantly, we have recognised
that a significant number of our colleagues
have faced unprecedented cost-of-living
challenges and have prioritised the delivery
of support and benefits to our wider
workforce, including meaningful cost-of-
living payments, pay increases, the launch
of our 2022 Save As You Earn Scheme (SAYE)
and Free Share (YourShare) programmes,
and other benefits as well as enhanced
learning and development opportunities.
We are extremely thankful to our colleagues
for their professionalism and hard work
during the year.
During the year, the Committee reviewed
the Directors’ Remuneration Policy to ensure
that it continues to support the execution of
our strategy and remains appropriate for a
listed company of our size. The Committee
approved a revised Directors’ Remuneration
Policy which will be put to shareholders at
our AGM in September 2023.
The Committee held extensive consultations
with our shareholders on the Remuneration
Policy itself, our approach to Executive
Directors’ pay, the vesting of LTIP awards
granted to the Executive Directors in 2020
and the support that we have given to our
wider workforce. I am extremely grateful to
the shareholders we consulted for their level
of engagement and for their support to the
proposals outlined.
This report comprises this introduction,
the Remuneration Policy (page 102) and the
Annual Report on Remuneration (page 111).
John Pattullo
Chairman of the Remuneration Committee
Committee membership
Members of the Remuneration Committee are shown below:
Committee membership
Number of
meetings
John Pattullo
(Chairman from 6 May 2022)
6/6
Mark Butcher 6/6
Avril Palmer-Baunack 6/6
Bindi Karia
(joined the Committee on 5 May 2022)
6/6
Nicola Rabson
(joined the Committee on 9 November 2022)
2/6
John Davies
(Chairman until leaving the Committee on
6 May 2022)
N/A
“This has been a busy year with a focus on
reviewing the Directors’ Remuneration Policy
and supporting our colleagues in the face
of unprecedented cost-of-living challenges.”
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Introduction to Remuneration report continued
Wider workforce pay and benefits
In FY2023, the Company made significant
pay awards to colleagues at lower salary
levels with increases of between 9% and 12%.
Increases for mid to senior levels were
capped at 3%. For FY2024, the committee
has approved a further 4.2% average pay
rise across the Group, with the highest rates
of increase again for those colleagues at
lower salary levels and a capped 3% rise
at mid to senior levels.
Recognising the current cost-of-living and
inflationary pressures on our employees,
we made a one-off payment of £250 in
December 2022 to over 4,500 employees
(representing approximately 60% of total
employees) and a further cost-of-living
payment of £500 was paid in April 2023
to approximately 90% of total employees.
The Group also deployed the 2022 SAYE
programme and, following shareholder
approval at the 2022 AGM, we launched our
new YourShare programme under which all
employees were provided with £500 of free
shares in the Company allowing colleagues
the opportunity to participate in the success
of the Group and promoting alignment
of interest between colleagues and
shareholders.
The Group also made significant
enhancements to the broader benefits
package, with improvements in health
and travel benefits, maternity and paternity
pay, bereavement leave, paid emergency
dependents leave, annual leave and the
company car scheme (which provides a
wider selection of cars, all of which are EV
or PHEV). In December 2022, all 500
colleagues on zero-hour contracts were
offered permanent contracts with the
majority accepting. We also introduced
several initiatives to support the wellbeing of
our people from our UK Employee Assistance
Programme to the introduction of wellbeing
apps to assist in the prevention and
management of mental health issues.
Although the primary reason for this focus on
the wider workforce was to mitigate potential
economic hardship, there is no doubt that the
business is benefitting from these changes:
retention has improved by a significant margin
and in the recent employment opinion survey
we saw a repeat of the high engagement
scores of the prior year with 9% more
colleagues participating.
Remuneration Policy and
shareholder consultations
This year the Company is required to put
its Remuneration Policy to shareholders for
approval at its AGM in September 2023 in-line
with the triannual requirements. Ahead of
this, the Committee appointed Deloitte LLP as
the Company’s remuneration advisers and,
with their support, we have conducted a
thorough review of the Policy.
We consulted with shareholders representing
c.40% of our register in Autumn 2022, to
understand any concerns ahead of our
review of the Remuneration Policy, and
again in Spring 2023 to present on the
Committee’s proposed approach.
Shareholder feedback was supportive
of the proposals outlined below.
Overall, the current Policy is aligned with
shareholder expectations on best practice
features, the structure and the incentive
opportunities for our Executive Directors
are market aligned and competitive.
Consequently, the Committee has decided
to leave much of the present policy
unchanged:
• Structure: The current structure of fixed
pay, annual bonus and LTIP is unchanged
as the Committee believes that this
framework continues to incentivise the
delivery of performance and the creation
of shareholder value.
• Maximum incentive opportunities: there
are no changes proposed to maximum
incentive opportunities in the context of
the current external environment.
We did, however, make a small number
of changes which we believe enhance the
Policy and which were fully supported by the
shareholders we consulted:
• Financial underpin: There will be a financial
underpin to the non-financial element of
the annual bonus whereby the Committee
will assess the payout under the non-
financial elements if the financial underpin
is not met, and would normally expect to
use discretion to reduce the non-financial
element in these circumstances.
• Bonus deferral: The approach to annual
bonus deferral will be simplified such that
50% of the total bonus paid will be deferred
into shares for three years to better align
with market practice (currently 50% of the
annual bonus plus any amount in excess
of 100% of base salary is deferred into
shares). The revised approach is at the
more stringent end of market practice for
FTSE 250 companies and the Committee
believes that this approach continues to
provide strong alignment with shareholders.
We have also refreshed the drafting of the
Remuneration Policy to improve clarity and
to align better with typical market practice.
In addition to the above, we have also
reviewed performance measures and the
following approach will apply for FY2024:
• Annual bonus: we will retain the current
measures and weightings; PBT (75%)
and strategic and operational targets
including ESG (25%). The Committee
believes that this approach continues
to be provide the right balance of
incentivising the delivery of profit
performance while ensuring that
we build the strategic foundations
for future growth.
• LTIP: taking into account shareholder
feedback, we intend to include a Relative
TSR measure (25%) along-side EPS (75%),
and to remove the PBT measure. Relative
TSR is to be measured against the FTSE 250
(excluding investment trusts) with threshold
vesting for median performance and
maximum for upper quartile. The
Committee believes that the approach
provides the right balance between
incentivising the delivery of sustained profit
performance with rewarding shareholder
value creation relative to peers.
Targets are set at appropriately stretching
levels taking into account our business plan,
the sector we operate in, analyst consensus
forecasts and the conservative positioning
of Executive Director incentive levels
against market.
The revised Directors’ Remuneration Policy
is set out in pages 102 to 110 of this Report.
Remuneration outcomes for
the year ended 30 April 2023
Annual bonus
The maximum annual bonus opportunity for
the year was 125% of salary for the CEO and
100% of salary for the CFO. Underlying PBT
performance for the year was £165.9m which
exceeded the maximum performance target.
Excellent performance was achieved against
our strategic measures which for FY2023
focused on building the foundations of and
starting to execute our ESG strategy. Key
highlights included: (i) the growth of our EV
and hybrid fleet in line with the UK car parc;
(ii) progress made on our EV transition plan;
(iii) broadening of our vehicle supply
channels; and (iv) progress made in our
ESG and sustainability agenda including
the creation of a sustainability committee,
appointment of a Head of ESG and the
publication of our maiden sustainability report
as well as the proposal of our Scope 1 and
Scope 2 targets: 10% reduction by 2027 and
100% green electricity. Taking this into
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100
150
200
250
300
13/08/2020 13/02/2021 13/08/2021 13/02/2022 13/08/2022
13/02/2023
FTSE 250
Redde Northgate
account, both the CEO and CFO received
a maximum annual bonus award based on
outcomes against financial and strategic
objectives, as outlined further in the main
body of the report. With respect to financial
objectives, this approach is in line with the
award outcome for those in the wider
workforce who participate in Group bonus
schemes. The Committee considered this
outcome in the context of performance in
the year, further detail of which is provided
elsewhere in the Annual Report and
Accounts, and determined that the outcome
was appropriate and that no discretion
was required.
2020 LTIP vesting
The 2020 LTIP awards were granted in August
2020 and based on appropriately stretching
PBT and EPS targets. The maximum target
for both PBT and EPS has been significantly
exceeded with PBT growth of c.180% and
EPS growth of c.80% over the performance
period and therefore the award is due to
vest in full in August 2023.
In determining the final outcome of the 2020
LTIP awards the Committee considered
guidance from shareholders and the proxy
agencies and the previous indication in the
2020 Annual Report and Accounts that the
Committee reserved the right to review the
formulaic outcome of the awards at the
date of vesting.
The Committee has fully considered the facts
and circumstances of the awards and the
performance delivered by the Group since
its merger in 2020. Overall, the Committee
considers that the outcome of the 2020
award is fair in the context of exceptional
performance and is not misaligned with
shareholder experience. Accordingly, we
have concluded that the vesting level is
appropriate and do not intend to use our
discretion to scale back the awards when
they vest in August 2023.
Introduction to Remuneration report continued
Prior to making this decision, we consulted
extensively with shareholders representing
over c.40% of the Company’s shareholder
base, and engaged with proxy agencies.
The feedback from the shareholders we
consulted overwhelmingly supported no
adjustment in the context of the Company’s
circumstances and performance during the
period of the awards.
The Committee’s conclusion was based on the
following circumstances and considerations:
• The Redde Northgate share price initially
fell as the market considered the merger,
prior to the pandemic. The Group’s
over-delivery on the merger benefits and
significant growth since February 2020 are
the primary factors behind Redde
Northgate’s sustained share price recovery.
The 2020 award was not granted at a
COVID-19 “low point”. Due to market
volatility, the share price was as low as 112p
in 2020 whilst the 2020 award was granted
at 186p (c.66% higher than the share price
low during the year).
• Since August 2020 when the award was
made, Redde Northgate has significantly
outperformed the FTSE 250 (exc.
investment trusts) index, delivering TSR
growth of 127% between this time and
the end of the 2023 financial year. This is
a significant outperformance of the 18%
growth seen across the same period for
the FTSE 250 (ex. investment trusts) index
as a whole.
• The executive team has consistently
performed strongly, exceeding
expectations in successfully implementing
the merger and transforming the business
whilst delivering growth and synergies,
including the achievement of £20m
annualised integration savings, double
the initial two-year target of £10m, and
delivered 18 months ahead of schedule.
The Group continues to perform well and
is trading ahead of expectations whilst
continuing to support its workers through
inflationary pressures. This is represented
in the Company’s strong share price
growth since 2020.
• The 2020 awards were granted after
detailed consultation with shareholders
and following the withdrawal of the
Company’s Value Creation Plan (VCP)
and the loss of legacy share awards by
the Executive Directors at the time of the
merger. The 2020 awards were granted at
a level that was intended to incentivise the
management team of the newly merged
entity to deliver the benefits of the merger,
and shareholder value more broadly, and
the Committee believes that it has been
successful in this aim.
• Vested awards for Executive Directors
remain subject to a holding period.
To secure the full increased value of
the award, the share price will need to
remain at least at the same level during
the two year holding period.
The Committee believes the overall quantum
for Executive Directors is appropriately
positioned and vesting does not produce
excessive outcomes particularly in the
context of the value created for shareholders.
Discretion
The Committee reviewed the formulaic
incentive outcomes for FY2023 and is
comfortable that the pay-outs reflect the
underlying performance of the Company.
The Committee did not exercise any
discretion in the award of Directors’
remuneration in the year.
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The Committee is comfortable that the Policy
operated as intended.
Operation of Policy for FY2024
Base salary
The Executive Directors’ salaries have been
increased by 3% to £627,628 for the CEO and
£405,369 for the CFO. This increase is below
the average increases given to the wider
workforce of 4.2% and in-line with the
increase for other mid to senior management
level colleagues.
Executive pensions
From 1 January 2023, Executive Director
pension levels were aligned to the majority
of the UK workforce (currently 4% of salary).
Annual bonus
As set out earlier there are no changes to
the maximum opportunity for FY2024 (125%
of salary for the CEO and 100% of salary for
the CFO) or to the balance of performance
measures. Half of any bonus earned net of
taxes will be used by the Executive Directors
to purchase shares, which will be subject to
a three-year holding period and cannot be
sold during that time. The annual bonus
will continue to be based 75% on PBT
performance and 25% on strategic and
operational measures including ESG.
Long term incentive plans
The Committee intends to grant LTIP awards
of 150% of salary for the Executive Directors in
line with the normal maximum award under
the Policy. Awards will be based 75% on EPS
performance and 25% on TSR performance
vs. the FTSE 250 (exc. investment trusts).
The Committee will have the discretion to
adjust the formulaic outcome of the bonus
and LTIP awards to take into account the
wider business performance.
Board engagement
with wider workforce
The Group engages with the wider workforce
in the business through the Employee
Engagement Forum, chaired by a senior
member of the Group Management Board.
The Employee Engagement Forum comprises
members from across the Group to ensure a
balanced representation of the workforce
and is attended by other members of senior
management from time to time. The
Employee Engagement Forum meets at
different locations across the Group to
promote accessibility.
During the year the Employee Engagement
Forum discussed the results of its third annual
colleague survey “Have Your Say” noting
continued high levels of employee
engagement across our workforce (74%),
with a 9% increase in colleagues completing
the survey. Key themes emerging included:
appreciation by colleagues of the significant
benefits enhancements they had received
in the year; acknowledgement of leadership
support and a positive culture; confidence
in the Group and its opportunity for growth;
pride in the service that we offer to
customers, and recognition of the significant
improvements in communications across the
Group. The Employee Engagement Forum
also discussed the significant work the
Group has undertaken in the area of learning
and development, with a central team
created to drive employee development
and progression, and on our
Apprenticeship programme.
The Employee Engagement Forum also
discussed the Group’s initiatives to support
colleagues’ mental wellbeing and the
significant enhancements the Group had
made to the broader benefits package.
The current cost-of-living challenges and the
measures undertaken by the company were
discussed in detail.
This year the Employee Engagement Forum
was consulted on wider workforce
remuneration including on the alignment
of the Executive Directors’ remuneration
with the wider workforce and the long term
interests of the Group and its shareholders
and other stakeholders.
Conclusion
The Committee believes it has successfully
balanced its responsibilities to motivate senior
leaders, support the broader workforce and
align with the interests of all stakeholders.
I hope to receive your support for the revised
Directors’ Remuneration Policy and the
Annual Remuneration Report at the AGM
in September.
John Pattullo
Chairman
5 July 2023
Introduction to Remuneration report continued
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This part of the Directors’ Remuneration
Report sets out the Remuneration Policy
(“Policy”) for the Directors and has been
prepared in accordance with the Companies
Act 2006, The Large and Medium-sized
Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013,
the Companies (Miscellaneous Reporting)
Regulations 2018, the UK Corporate
Governance Code and the UK Listing Rules.
The Group’s existing Directors’ Remuneration
Policy was approved by shareholders at the
Company’s AGM in October 2020. Subject
to shareholder approval, this revised Policy
will take effect from the 2023 AGM and is
intended to apply until the 2026 AGM.
The Policy is designed to support the
performance ambitions of the Group
and create long term shareholder value.
In establishing the Policy, the Committee has
taken into account the approach to pay for
our wider workforce to ensure that executive
remuneration is appropriate.
How the views of shareholders
are taken into account
The Committee considers the views of
its shareholders to be paramount in
determining remuneration policy. Feedback
is received each year in relation to the AGM
and other meetings and communications
with shareholders, and shareholder
guidance and feedback is considered by
the Committee as an essential part of its
annual review of remuneration.
When any material changes to the Policy
are envisaged, the Committee Chairman
will consult with major shareholders and if
any shareholders raise concerns with regard
to remuneration issues, we will seek to
understand and respond to those concerns.
Directors’ Remuneration Report
How the Committee considers that the Policy meets the following factors in Provision 40 of the UK Corporate Governance Code:
Clarity The Policy is set out below in a clear and transparent manner. We engage with shareholders periodically on executive pay to
ensure it is well understood and that their feedback is considered. We provide disclosure in straightforward and concise terms
with maximum award levels being clearly defined.
Simplicity Remuneration structures are simple and market typical, whilst at the same time incorporating the necessary structural features
to ensure a strong alignment to performance.
Risk The Policy has been shaped to discourage inappropriate risk taking. Awards under the Policy are subject to malus and
clawback provisions. The performance conditions are reviewed annually to ensure that they remain suitable. The Committee
also has the right to override formulaic outcomes if it concludes that the outcomes do not reflect underlying performance. To
avoid conflicts of interest, Committee members are required to disclose any conflicts or potential conflicts ahead of Committee
meetings. No Executive Director or other member of management is present when their own remuneration is under discussion.
Predictability Incentives are capped in the Policy with outcomes clearly based on performance against defined performance metrics.
Proportionality The link between each element of the Policy and Company strategy is noted in the table below.
Variable pay is subject to a combination of financial and non-financial measures that are linked to Company strategy. LTIP holding
periods and shareholding requirements (including post-exit) all ensure alignment to long term value creation and strategic goals.
Alignment
to culture
We seek to align incentives to our Group values from time to time and the Policy for our Executive Directors is designed in
accordance with the same principles that underpin remuneration for the wider employee population.
In developing this Policy, the Committee
Chairman consulted with our largest
shareholders and the proxy agencies and took
into account their feedback. The shareholders
consulted were supportive of the Policy.
Consideration of employment
conditions elsewhere in the Group
When setting the Policy for the Executive
Directors, the Committee takes into
account the overall approach to reward
and the pay and employment conditions
of other employees in the Group. Salary
increases will ordinarily, in percentage
terms, be no more than those of the wider
workforce and the Committee also reviews
employee remuneration practices and
trends across the Group and these are taken
into account when making decisions about
Directors’ remuneration.
As part of the Committee’s broader remit
under the Code, the Committee reviews the
Group’s wider remuneration policies and
practices with the objective of ensuring an
appropriate cascade of policy from Executive
Directors to the rest of the business. The Group
has enhanced employee engagement
across the business through the Employee
Engagement Forum, chaired by a senior
member of the Group Management Board,
to help the Board understand the views of the
workforce and to ensure feedback between
the workforce and the Board on an ongoing
basis. There was engagement with employees
via the Employee Engagement Forum during
the year in relation to Group remuneration
matters and how executive remuneration
aligns with the wider Group pay policy.
The Policy for Directors
The Committee aims to ensure that Executive
Directors are fairly and competitively
rewarded for their individual contributions by
means of basic salary, benefits in kind and
pension benefits.
High levels of performance are incentivised
and shareholder alignment is created for
Executive Directors through the annual bonus
scheme (with an element deferred into shares)
and the LTIP, which is delivered in shares,
measures performance over a longer period.
The Committee’s policy is to focus on longer
term sustained performance of the Group by
applying greater weighting to the variable
elements of executive remuneration. This is
done by paying a significant proportion of
the potential remuneration package in
shares, to ensure that executives have a
strong ongoing alignment with shareholders
through the Company’s share price
performance.
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Directors’ Remuneration Report continued
Purpose and link to strategy Operation Maximum opportunity
Base salary
To recruit, reward and retain
executives of a suitable calibre
for the role and duties required.
Normally reviewed annually by the Committee, taking account of Group performance,
individual performance, changes in responsibility, changes in the size and complexity
of the business and levels of increase for the broader UK population.
Consideration is also given to remuneration levels within relevant FTSE and industry
comparator companies.
The Committee considers the impact of any base salary increase on the total
remuneration package.
There is no set maximum salary or salary increase but salary
increases for Executive Directors will not normally exceed
the general increase for the broader employee population.
In exceptional circumstances, for example, changes in the
scope, or responsibility of the role, changes in the size of the
Company or where there has been a significant change
in market practice or to allow the base salary of newly
appointed executives to increase in line with their experience
and contribution, higher increases may be awarded and the
Committee will communicate the rationale to shareholders
as appropriate.
Details of the outcome of the most recent salary review
are provided in the Directors’ Remuneration Report.
Benefits
To provide market competitive
benefits to ensure the
wellbeing of executives.
The Company typically provides:
• A car or cash allowance in lieu;
• Medical insurance;
• Death in service benefits; and
• Critical illness insurance.
Executive Directors are also entitled to 30 days’ contractual annual leave per annum
and such other leave as the Company offers to employees from time to time.
The Committee may introduce other benefits if it is considered appropriate to do so.
Reimbursement of all costs associated with reasonable expenses incurred for the proper
performance of the role including tax thereon where a business expense is deemed taxable
by HMRC.
Where an Executive Director is required to relocate, appropriate one off or ongoing relocation
benefits may be provided (e.g. housing, education etc), which may include a cash payment
to cover reasonable expenses.
Executive Directors may participate in the SIP, SAYE and any other all-employee plans on the
same basis as other employees, up to HMRC approved limits.
The value of benefits is based on the cost to the Company
and is not predetermined. It is a relatively small part of the
overall value of the total remuneration package.
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Purpose and link to strategy Operation Maximum opportunity
Pension
To provide market
competitive retirement
benefits.
A Company contribution to a Group personal pension plan or provision of cash allowance
in lieu at the request of the individual or a combination of the two.
The maximum annual pension contribution or cash
allowance is in line with the rate typically applicable for the
workforce in the country in which the Executive Director is
based. The current Executive Directors are based in the UK,
and the Committee has determined that the rate available
to the wider workforce that should be used for this purpose
is currently 4%.
Annual bonus
To encourage and reward
delivery of the Company’s
operational objectives and
to provide alignment with
shareholders through the
deferred share element.
The annual bonus is based on performance against one or more financial targets.
A proportion (not exceeding 25%) may also be based on non- financial or individual
measures. Performance is normally assessed over a financial year.
There will normally be a financial underpin to the non-financial element of the bonus.
The Committee will assess the pay-out under the non-financial element if the financial
underpin is not met, and would normally expect to use discretion to reduce the
non-financial element in these circumstances.
Details of the performance measures, weightings and targets (where these are not considered
commercially sensitive) will be provided retrospectively in the Annual report on remuneration.
Half of any bonus earned net of taxes will be used by the Executive Directors to purchase
shares which will be subject to a three-year holding period and cannot be sold during that
time.
The Committee has the discretion to adjust the formulaic outcome of the LTIP where it
considers it is not appropriate taking into account such matters as it considers relevant
including without limitation the underlying performance of the Company, investor experience,
wider employee or stakeholder experience.
Recovery and withholding provisions apply as outlined on page 106.
Maximum opportunity: 150% of salary for CEO
1
and; 100%
of salary for other executives.
Target: No greater than 50% of maximum.
Threshold: No greater than 25% of maximum.
For performance below threshold, no bonus is payable.
Directors’ Remuneration Report continued
1 For FY2024 the maximum bonus opportunity for CEO is 125% of salary.
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Purpose and link to strategy Operation Maximum opportunity
Long term incentives (LTIP)
To encourage and reward
delivery of the Company’s
strategic objectives and
provide alignment with
shareholders through the
award of shares.
Awards are normally granted annually in the form of conditional shares or nil-cost options
or in such other form that the Committee determines has the same economic effect.
Where awards are in the form of nil-cost options, participants may have up to ten years
from grant to exercise awards.
Awards normally vest subject to continued employment and satisfaction of performance
conditions normally measured over three years. Vested awards will normally be subject to
an additional two-year holding period, during which time awarded shares may not be sold
(other than to meet tax or social security obligations).
The Committee will select the performance measures for awards that it considers best support
the Company’s medium to long term objectives. If the Committee considers that the changes
it is making in selecting alternative measures or weightings for a new award are substantive it
would normally consult with the Company’s major shareholders prior to making any changes.
The Committee has the discretion to permit the payment of dividend equivalents arising over
the period between grant and the vesting date. These would normally be paid in shares and,
only in exceptional circumstances cash.
The Committee has the discretion to adjust the formulaic outcome of the LTIP where it
considers it is not appropriate taking into account such matters as it considers relevant
including without limitation the underlying performance of the Company, investor experience,
wider employee or stakeholder experience.
Recovery and withholding provisions apply as outlined on page 106.
The maximum award in respect of a financial year is
normally 150% of salary although exceptionally awards of
250% of salary may be made, e.g. in recruitment, in line with
the LTIP rules.
The normal grant policy in respect of a financial year is 150%
of salary for each Executive Director.
No greater than 25% of the grant vests for threshold
performance increasing progressively to 100% for
maximum performance.
If performance is below threshold for a measure, then the
proportion of the award subject to that measure will lapse.
Non-Executive Director Fees
To attract and retain a high
calibre Chairman and
Non-Executive Directors by
offering a market competitive
fee level.
The Chairman is currently paid a consolidated single fee for all their responsibilities. The
Non-Executive Directors are paid a basic fee. The Chairs of the main Board Committees and
the Senior Independent Director are paid an additional fee to reflect their extra responsibilities.
Additional fees may be paid for new roles and/or additional responsibilities and/or time
commitments.
The level of these fees is reviewed periodically by the Committee for the Chairman and by
the Chairman and Executive Directors for the Non- Executive Directors within the overall limit
set by the Articles of Association and with reference to market levels in comparably sized FTSE
companies, time commitment and responsibilities of the Non-Executive Directors. Fees are
paid in cash.
The Chairman and Non-Executive Directors are not normally entitled to participate in any
of the Group’s incentive plans or pension plans.
Additional benefits may be introduced if considered appropriate.
Reimbursement of all reasonable expenses including costs associated with reasonable
expenses, such as tax payable on expenses which HMRC deem to be taxable, incurred
for the proper performance of the role.
The maximum aggregate amount is currently £700,000
as provided in the Articles of Association but this amount
may be increased or decreased in accordance with the
Company’s Articles of Association from time to time.
Note references in this policy to the ‘LTIP’ refer to the Executive Performance Share Plan approved by shareholders in 2019.
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Recovery and
withholding provisions
Recovery and withholding provisions apply
under the annual bonus and the LTIP to all
participants in the event of a restatement
of the Group’s accounts, error in assessing
performance criteria, corporate failure, serious
reputational damage, misrepresentation or
such other exceptional circumstances as the
Committee determines. These provisions
normally apply for a period of three years
from the date at which performance has
been determined by the Committee.
Choice of performance measures
and approach to target setting
The annual bonus is based on performance
against one or more financial measures and
may also include an element (no more than
25%) of non- financial/individual measures if
the Committee considers it appropriate,
all based on the priorities for the business
in the year ahead. The Committee will set
performance targets taking into account
market and investor expectations, prevailing
market conditions and the Group’s business
plan for the year.
Awards under the LTIP will normally be
based on performance against one or
more financial or share price related
measures but the Committee retains the
discretion to introduce a non-financial/
strategic or ESG-related measure if
considered appropriate. This would normally
account for no more than 25% of the award.
The Committee selects measures that reflect
the Board’s priorities and closely align to the
long term strategy and key performance
indicators of the business. The Committee will
review the choice of performance measures
and set appropriately challenging targets
prior to each award being made based on
market conditions and the Group’s long term
priorities and business plan at that time.
The measures and targets for outstanding
awards are set out in the Annual Report
on Remuneration.
Annual bonus plan
and share plan policy
The Committee will operate its LTIP, SIP, SAYE
and any other share or bonus schemes that
it maintains or introduces from time to time
according to the rules of each respective
plan and consistent with normal market
practice and the Listing Rules, including
flexibility in a number of regards.
Factors over which the Committee will
retain flexibility include (albeit with quantum
and performance targets restricted to the
descriptions detailed above):
• How to determine the size of an award,
a payment, or when and how much
of an award should vest;
• How to deal with a change of control
or restructuring of the Group;
• Other than in the case of stated good
leaver reasons, whether a Director is a
good/bad leaver for incentive plan
purposes and whether and what proportion
of awards vest at the time of leaving or at
the original vesting date(s) as relevant;
• How and whether an award may be
adjusted in certain circumstances (e.g. for
a rights issue, a corporate restructuring or
for special dividends).
The terms of the LTIP rules provide the
Committee with the discretion to grant and/
or settle all or part of an LTIP award in cash.
In practice this discretion would only be used
in exceptional circumstances for Executive
Directors or to enable the Company to settle
any tax or social security withholding which
may apply.
The Committee may vary or substitute
any performance measure applying to
the annual bonus (including altering the
weighting of annual bonus performance
measures) or LTIP if an event occurs which
causes it to determine that it would be
appropriate to do so (which may include an
acquisition), provided that any such variation
or substitution is fair and reasonable and (in
the opinion of the Committee) the change
would not make the measure materially less
demanding. If the Committee were to make
such a variation, an explanation would be
given in the next Directors’ Remuneration
Report.
All historic awards that were granted under
any current or previous share schemes
operated by the Company but remain
outstanding will normally remain eligible
to vest based on their original award terms.
Share ownership requirements
The Executive Directors are normally
expected to accumulate, over a period
of five years from the date of appointment,
a holding of ordinary shares of the Company
equivalent in value to 200% of their basic
annual salary, measured annually.
It is intended that this should be achieved
primarily through shares acquired on the
exercise of share incentive awards and
from the deferral of annual bonus and that
Directors are not required to go into the
market to purchase shares, although this is
encouraged and any shares so acquired
would count towards meeting the guidelines.
Executive Directors are expected to retain all
shares which they are required to acquire with
annual bonus payments and all vested LTIP
or other awards, subject to sales to meet tax
obligations and the Committee’s discretion
in exceptional circumstances, until the
ownership requirement is met.
Executive Directors are expected to hold
the lower of (1) shares held on cessation and
(2) shares equivalent in value to 200% of
salary at the time of cessation, for a period
of two years from the date they cease to be
an Executive Director. The Committee retains
discretion to waive this guideline if is not
considered to be appropriate in the specific
circumstances.
Summary of decision making
process and changes to policy
During the year, the Committee undertook a
review of the Policy and its implementation to
ensure that the Policy supports the execution
of strategy and the delivery of sustainable
long term shareholder value. The Committee
discussed the content of the Policy at
Committee meetings during the year.
Throughout the review process, the
Committee took into account the 2018
UK Corporate Governance Code, wider
workforce remuneration and emerging best
practice in relation to Executive Director
remuneration. The Committee also
considered input from management and
our independent advisers. The Committee
considers that the overall remuneration
framework – based on base salary, an annual
bonus plan plus a performance share plan –
remains appropriate to continue to motivate
management to drive long term sustainable
performance for shareholders.
The key changes to the Policy are to
introduce a financial underpin to the bonus
plan, simplify the approach to annual bonus
deferral such that 50% of any bonus earned
is now deferred into shares (the share deferral
requirement was previously: up to 100% of
salary, half of any bonus earned; and in
excess of 100% of salary, all of any bonus
earned), and to remove the VCP from the
policy as this plan was not implemented.
Other changes have been made to the
wording of the Policy to aid operation and
to increase clarity.
Directors’ Remuneration Report continued
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Differences in remuneration policy
for Executive Directors compared
to other employees
The Policy for the Executive Directors is
designed with regard to the policy for
employees across the Group as a whole. For
example, the Committee takes into account
the general basic salary increases for the
broader UK population when determining
the annual salary review for the Executive
Directors. There are some differences in the
structure of the remuneration policy for the
Executive Directors and certain other senior
employees as against employees across the
Group more broadly, which the Committee
believes are necessary to reflect the different
levels of responsibility of employees across
the Group.
The key differences in remuneration policy
between the Executive Directors and
employees across the Group are the
increased emphasis on performance related
pay and the inclusion of a significant share
based long term incentive plan for Executive
Directors. Long term incentives are not
provided outside of the most senior executives
as they are reserved for those considered as
having the greatest potential to influence
Group performance.
External Non-Executive
Director positions
Subject to Board approval, Executive
Directors will normally be permitted to take
on one non-executive position with another
company and will normally be permitted to
retain their fees in respect of such positions.
Approach to recruitment
and promotions
The remuneration package for a Director will
be set in accordance with the terms of the
Company’s Policy in force at the time of
appointment, with each element subject to
the limits as specified in the Policy table
above.
The salary for a new Executive Director will
be set by reference to a number of factors
including their previous experience, and may
be subject to phased increases over the first
few years as the executive gains experience
in their new role.
The Committee may buy-out incentive pay,
which would be forfeited by reason of
leaving the previous employer, in order to
secure an appointment, when it considers
this to be in the best interests of the Company
and its shareholders.
Any buy-out will take into account and
replicate as far as possible, the form (cash or
shares), delivery mechanism, performance
measures, timing and expected value of the
remuneration being forfeited and such other
specific matters as the Committee considers
relevant.
Other benefits, remuneration or contractual
entitlements may also need to be “bought
out” and the Committee will use its judgement
as to the most appropriate way to structure
this taking into account the principle that
terms should be no more generous than
those forfeited.
For an internal appointment to an Executive
Director role, any variable pay element
awarded in respect of their prior role will
be allowed to pay out according to its terms.
In addition, any other ongoing remuneration
obligations existing prior to appointment
may continue, if relevant.
For external and internal executive
appointments, the Committee may
agree that the Company will meet certain
relocation and other incidental expenses
and associated taxation as appropriate.
Other elements may be included in the
following circumstances: (i) an interim
appointment being made to fill an Executive
Director role on a short term basis; and (ii) if
exceptional circumstances require that the
Chair or a Non-Executive Director takes on
an executive function on a short term basis.
For the appointment of a new Chairman or
Non-Executive Director, the fee arrangement
would be set in accordance with the
approved remuneration policy in force
at that time.
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Service contracts and
payments for loss of office
The Committee reviews and approves the
contractual terms for new Executive Directors
to ensure that these reflect best practice.
Service contracts normally continue until
the Director’s agreed retirement date or
such other date as the parties agree. The
service contracts contain provision for early
termination. In line with best practice equal
notice periods will apply to the Executive
Directors and the Company and these
will normally be six months, although in
exceptional circumstances a notice period
may be agreed of up to a maximum of
12 months.
An Executive Director’s service contract may
be terminated without notice and without any
further payment or compensation, except for
sums accrued up to the date of termination,
on the occurrence of certain events such
as gross misconduct. If the employing
company terminates the employment of
an Executive Director in other circumstances,
compensation is limited to salary due for any
unexpired notice period and any amount
assessed by the Committee as representing
the value of other contractual benefits
(including pension) which would have been
received during the period. Payments would
normally be subject to mitigation. Service
contracts are available for inspection at
the Company’s registered office.
In circumstances in which a departing Director
may be entitled to pursue a legal claim, the
Company may negotiate settlement terms
and, with the approval of the Committee on
the remuneration elements therein, enter into
a settlement agreement accordingly.
In summary, the contractual provisions are as follows:
Provision Detailed terms
Notice period Current Executive Directors: normally six months from
the Director and six months from the Company.
Any future Executive Directors: normally six months’
notice from both the Company and the Director
(up to a maximum of 12 months in exceptional
circumstances).
Termination period Base salary plus benefits (including pension), subject
to mitigation and paid on a phased basis for notice
period (unless the Committee determines otherwise).
In addition, any statutory entitlements or sums to
settle or compromise claims in connection with the
termination would be paid as necessary.
Remuneration entitlements A pro rata bonus may also become payable for
the period of active service along with vesting
of outstanding share awards (in “good leaver”
circumstances – see below).
In all cases performance targets would apply.
Change of control There are no enhanced terms in relation to a change
of control
Directors’ Remuneration Report continued
Any share-based entitlements granted to
an Executive Director under the Company’s
share plans will be determined based on the
relevant plan rules. The requirement to hold
deferred bonus shares will normally continue
on their original time horizons. The default
treatment for other awards is that any
outstanding awards lapse on cessation of
employment. However, in certain prescribed
circumstances, such as death, ill health,
redundancy, retirement with the agreement
of the Committee, transfer of the employee’s
employing business out of the Group or other
circumstances at the discretion of the
Committee (taking into account the
individual’s performance and the reasons
for their departure), “good leaver” status
can be applied.
Under the LTIP, awards held by good leavers
will usually be scaled back with respect to
the actual period of service and vest at the
usual time and be subject to the holding
period, unless the Committee determines
otherwise. For share awards under the LTIP
held by good leavers, awards remain subject
to the performance conditions.
On a change of control, awards will normally
vest subject to a performance assessment
at that time and usually be scaled back for
the actual period of service, unless the
Committee determines otherwise.
For all leavers, the Committee may
also determine to make a payment in
reimbursement of a reasonable level of
outplacement and legal fees in connection
with a settlement agreement as well as any
statutory entitlement.
All Non-Executive Directors have letters of
appointment with the Company for an initial
period of three years, subject to annual
reappointment at the AGM.
This policy provides for a notice period for the
Chairman of up to six months and for other
Non-Executive Directors up to three months.
The appointment letters for the current
Non-Executive Directors provide that no
compensation is payable on termination,
other than accrued fees and expenses.
Legacy arrangements
The Committee reserves the right to make any
remuneration payments and/or payments for
loss of office (including exercising any
discretions available to it in connection with
such payments) notwithstanding that they are
not in line with the Policy set out above where
the terms of the payment were agreed:
(i) before the Policy set out above came into
effect, provided that the terms of the payment
were consistent with any shareholder-
approved Directors’ remuneration policy in
force at the time they were agreed; or (ii) at
a time when the relevant individual was not a
Director of the Company (or other persons to
whom the Policy set out above applies) and,
in the opinion of the Committee, the payment
was not in consideration for the individual
becoming a Director of the Company or such
other person. For these purposes, “payments”
includes the Committee satisfying awards of
variable remuneration and, in relation to an
award over shares, the terms of the payment
are “agreed” no later than at the time the
award is granted. This Policy applies equally
to any individual who is required to be treated
as a Director under the applicable regulations.
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Directors’ Remuneration Report continued
Minimum • Consists of base salary, benefits and pension.
• Base salary is the salary to be paid in FY2024.
• Pension of 4% of salary.
• Benefits are based on the FY2023 taxable value.
In line with expectations • Based on a portion of maximum.
• Annual bonus: 50% of maximum.
• LTIP: 50% of maximum.
Maximum • Based on the maximum remuneration receivable
(excluding share price appreciation and dividends):
• Annual bonus: maximum bonus of 125%/100% of base
salary for the CEO/CFO respectively.
• LTIP: maximum face value of LTIP award of 150% of base
salary for CEO and CFO.
Maximum + 50% share price
growth
• The maximum scenario plus the value resulting from share
price growth of 50% from the LTIP award.
31%
£1,534
39%
49%
33%
42%
52%
26%
33% 27%
21%
28% 23%
100% 43% 28% 24%
100% 46% 30% 25%
£0
£500
£1,000
£1,500
£2,000
£2,500
£3,000
£2,397
£2,868
£671
Minimum On-target Maximum
Group Chief Executive – Martin Ward Chief Financial Officer – Philip Vincent
Maximum
with 50%
share price
increase
Minimum On-target Maximum Maximum
with 50%
share price
increase
£438
£945
£1,452
£1,756
Executive Director total remuneration at different levels of performance (’000)
Reward scenarios
The Policy results in a significant portion
of remuneration received by Executive
Directors being dependent on Company
performance. The chart below illustrates
how the total pay opportunities for the
Executive Directors vary under four different
performance scenarios: fixed pay only,
on-target, maximum and maximum plus
50% share price growth. These charts are
indicative as share price movement and
dividend accrual have been excluded
except for a 50% increase in the LTIP award
under the maximum scenario to reflect share
price growth.
Salary levels (on which other elements of
the package are calculated) are based
on those applying on 1 May 2023. The value
of taxable benefits is based on the cost of
supplying those benefits (as disclosed) for the
year ending 30 April 2023. SAYE awards have
been excluded. The annual bonus and LTIP
opportunity are those that apply for FY2024.
Fixed Pay
Annual Bonus
LTIP
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Service contracts and letters of appointment
The table below gives details of the service contracts and letter of appointments for each member of the Board.
Date of appointment
Date of current contract/letter
of appointment
Notice from the
Company
Notice from the
individual
Unexpired period of service
contract/letter of appointment
Executive Directors
M Ward
1
21 February 2020 22 December 2010 12 months 12 months Rolling contract
P Vincent 16 July 2018 16 July 2018 6 months 6 months Rolling contract
Non-Executive Directors
A Palmer-Baunack 12 August 2019 12 August 2019 6 months 6 months Rolling contract
3
J Pattullo 1 January 2019 18 December 2020 3 months 3 months Rolling contract
3
M Butcher 23 September 2019 18 September 2019 3 months 3 months Rolling contract
3
J Davies
2
21 February 2020 21 February 2020 3 months 3 months Rolling contract
3
B Karia 5 May 2022 5 May 2022 3 months 3 months Rolling contract
3
M McCafferty 21 February 2020 21 February 2020 3 months 3 months Rolling contract
3
N Rabson 9 November 2022 9 November 2022 3 months 3 months Rolling contract
3
1 Redde plc (as it was) contract rolled over.
2 John Davies stepped down as Non-Executive Director and Chairman of the Remuneration Committee on 6 May 2022.
3 The Non-Executive Directors’ contracts are typically entered into for an anticipated term of three years, which is extended by the Board for further terms as appropriate.
Directors’ Remuneration Report continued
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Annual Report on Remuneration
Implementation of Remuneration Policy in 2024
The table below summarises the key components of our Policy framework and indicates how we intend to operate the Policy in FY2024.
Operation 2024 Implementation
Fixed
Salary Fixed remuneration, which reflects role, skills and opportunities. • CEO – £627,628 (+3%)
• CFO – £405,369 (+3%)
The 3% increases for FY2024 are aligned with the capped 3% rate applied to mid
and senior management levels and below the average 4.2% pay increase across
the Group (with the greatest increases applied to those at lower salary levels).
Pension Executive Directors receive pension contributions in line with the wider workforce
(currently considered to be 4% of base salary).
No change for FY2024. Aligned with UK workforce effective 1 January 2023.
Executive directors receive a pension contribution of 4% of base salary which
is considered to be aligned with UK workforce effective 1 January 2023.
Benefits Car allowance, healthcare and life assurance. No change for FY2024.
Variable
Annual bonus Maximum opportunity: 150% of salary for CEO (FY2024 maximum opportunity
of 125% of salary); and 100% of salary for other executives. 50% of award deferred
into shares for three years. Annual bonus awards will also be subject to malus and
clawback provisions.
Maximum: 100% payout. Target: No greater than 50% of maximum.
Threshold: No greater than 25% of maximum. For performance below threshold,
no bonus is payable.
• CEO – maximum opportunity 125% of salary
• CFO – maximum opportunity 100% of salary
Performance measures are based 75% on financial (PBT) performance and 25%
strategic measures (including ESG measures).
As in previous years, the targets are considered commercially sensitive and will
be disclosed retrospectively.
There will be a financial underpin to the non-financial element of the bonus
whereby the Committee will assess the payout under the non-financial elements
if the financial underpin is not met and would normally expect to use discretion
to reduce the non-financial element in these circumstances.
LTIP The maximum award in respect of a financial year is normally 150% of salary
although exceptionally awards of 250% of salary may be made, e.g. in recruitment,
in line with the LTIP Rules. The normal grant policy in respect of a financial year is
150% of salary for each Executive Director. No greater than 25% of the grant vests for
threshold performance increasing progressively to 100% for maximum performance.
If performance is below threshold for a measure, then the proportion of the award
subject to that measure will lapse.
• Executive Directors – maximum opportunity 150% of salary.
• Performance measures are 75% EPS and 25% TSR vs. the FTSE 250 (excluding
investment trusts).
• EPS targets: the FY2024 EPS threshold is 57.9p and maximum is 61.5p. The EPS
targets are set at appropriately stretching levels taking into account the Group’s
business plan, analyst consensus and the current external environment.
• TSR targets are median (25% vesting) and upper quartile (100% vesting).
• Awards will be subject to a two-year holding period after vesting.
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Operation 2024 Implementation
Fees for the
Chairman and
Non-Executive
Directors
The Chairman is currently paid a consolidated single fee for all their responsibilities.
The Non-Executive Directors are paid a basic fee. The Chairs of the main Board
Committees and the Senior Independent Director are paid an additional fee to
reflect their extra responsibilities.
The fees for the Non-Executive Directors remain unchanged for FY2024. The fees are
as set out below.
Fee as at
1 May 2022
Fee as at
1 May 2023 Increase
Chairman £200,000 £200,000 0%
Base fee £56,650 £56,650 0%
Senior Independent Director £10,000 £10,000 0%
Audit Committee Chairman £10,000 £10,000 0%
Remuneration Committee Chairman £10,000 £10,000 0%
Directors’ Remuneration Report continued
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Remuneration for the year ended 30 April 2023 (audited)
The table below sets out the remuneration received by the Directors in relation to performance in the year ended 30 April 2023 (and for long term incentive awards’ performance periods
ending in the year) and in the year ended 30 April 2022.
£000
Salary
and fees
Taxable
benefits
Annual
bonus
Long term
incentive Pension Total
Total
Fixed
Total
Variable
M Ward 2023 609 19 762 2,979
1
69 4,438 697 3,741
2022 592 19 74 0 – 89 1,440 700 740
P Vincent 2023 394 17 394 1,823
1
52 2,680 463 2,217
2022 382 14 382 – 69 847 465 382
Non-Executive Chairman
A Palmer-Baunack 2023 200 – – – – 200 200 –
2022 200 – – – – 200 200 –
Non-Executive Directors
J Pattullo 2023 76 – – – – 76 76 –
2022 65 – – – – 65 65 –
M Butcher 2023 67 – – – – 67 67 –
2022 65 – – – – 65 65 –
J Davies
2
2023 18 – – – – 18 18 –
2022 65 – – – – 65 65 –
B Karia
3
2023 56 – – – – 56 56 –
2022 – – – – – – – –
M McCafferty 2023 57 – – – – 57 57 –
2022 55 – – – – 55 55 –
N Rabson
4
2023 27 – – – – 27 27 –
2022 – – – – – – – –
1 For FY2023, the 2020 LTIP has been valued based on the average share price during the three-month period to 30 April 2023 of 382.8p and a vesting outcome of 100%. The share price used to determine the level of award was 186p;
therefore, of the vested amount 197p per share relates to share price appreciation over the performance period. No discretion has been exercised in relation to share price changes. The 2020 LTIP is included in total remuneration
because the performance conditions have been met, however vesting of awards remain subject to the service condition.
2 John Davies stepped down as Non-Executive Director and Chairman of the Remuneration Committee on 6 May 2022.
3 Bindi Karia was appointed to the Redde Northgate plc Board on 5 May 2022.
4 Nicola Rabson was appointed to the Redde Northgate plc Board on 9 November 2022.
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Pension and taxable benefits
A breakdown of the taxable benefits received by Executive Directors is set out in the table below:
M Ward
£000
P Vincent
£000
Car 15 15
Medical insurance 4 2
The Executive Directors are eligible for membership of a Group personal pension plan. In view of the Annual Allowance cap, part or all of their entitlements were paid to them in cash.
Philip Vincent received an entitlement of 18% of base salary and Martin Ward received an entitlement of 15% of base salary until 31 December 2022. From 1 January 2023, in line with the
commitment made in prior remuneration reports and shareholder guidance, the pension entitlement was reduced to bring it in line with the pension provision for the wider UK workforce,
which is currently considered to be 4%.
Annual bonus for the year ended 30 April 2023 (audited)
Total opportunity
The maximum bonus opportunity for the CEO was 125% of salary and for the CFO was 100% of salary. The bonus was based 75% on Group PBT and 25% on strategic objectives. The targets,
performance against them and resulting payment are set out in the tables below.
Financial objectives
The element related to financial objectives (PBT performance) was awarded at maximum of 75% of the total bonus opportunity (93.75% of salary for M Ward and 75% of salary for P Vincent)
as follows:
PBT performance Threshold performance Target performance Maximum performance Actual PBT performance
PBT 75% of total bonus £149. 3m £154.3m £159. 3m £165.9m
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Strategic objectives
Awarded at maximum of 25% of the total bonus opportunity (31.25% of salary for M Ward and 25% of salary for P Vincent) as set out below. The Directors’ strategic objectives were set by the
Committee at the beginning of the financial year and were based on a robust framework of clear objectives directly aligned to the Board’s strategic priorities for the year. For FY2023 the
strategic measures were focused solely on ESG measures to incentivise the development and acceleration of our ESG strategy and were the same for both Executive Directors.
The strategic objectives and the performance against them for FY2023 are set out below:
Objective Performance/achievement Max scoring %
Sustainability: grow EV and hybrid fleet to be no less than the UK car parc
as reported by SMMT or DfT as of 30 April 2023 – measurement to be split
between cars and vans with each % to at least match the UK car parc.
Fully met. The percentage of EV and hybrid vehicles on the fleet was greater than the
respective percentage reflected in the latest Government statistics as at the date of this Report
for UK car parc, which show electric and hybrid cars at 6.4% of all cars and 0.9% for vans.
6.25%
EV transition: strategic EV transition plan, deliver a continuous and evolving
plan for transition to EV/hybrid and demonstrate how this plan, for the UK
to rotate away from ICE vehicles by 2030, and for Spain by 2040 will be met.
The plan needs to show how the trajectory and funding availability will
support the transition and the target milestones for each reported year.
Fully met. A detailed presentation was provided to the Board, including setting out business
strategy and target data, and the electrification of the fleet. Further detail not provided due
to commercial sensitivity.
6.25%
Vehicle supply: Together with the management team develop a strategic
procurement plan to extend the vehicle supply opportunity (both ICE and
EV/hybrid) to existing and new suppliers.
Fully met. The Group has made significant progress in broadening its vehicle supply channels
to ensure that we have confidence that we will in future be able to continue to provide a
sustainable and attractive offering to our customers. Further information is commercially sensitive.
6.25%
Environment & carbon reduction: Incrementally show an improvement in our
reported net zero plans including developing an annualised reduction target
in carbon emissions for our Scope 1 and Scope 2 targets (Scope 3 to follow
in later years) with clear targets and/or signposting to achieve this.
Fully met. The Group successfully created its Sustainability Committee, recruited a Head of ESG
and issued our maiden Sustainability Report in the year. Significant progress has been made
quantifying Scope 1 and Scope 2 emissions and collating information regarding Scope 3.
Two Scope 1 and Scope 2 targets proposed: 10% reduction by 2027/2030 and 100% green
electricity. Physical risk assessments were completed for seven sites, with mitigating actions
presented where necessary. Completed initial assessment of TCFD transition risks including
customer and supplier assessment with potential next steps. Our external ESG adviser
presented to the Board and UK&I average fleet CO
2
e emissions were reduced from
156.3g per km to 142.8g per km.
6.25%
Total 25% out of 25%
Based on performance to 30 April 2023, the annual bonus outcomes for Executive Directors during the year are shown on pages 99 to 100. The Committee is satisfied that no adjustments
to the pay-outs are required, and that the outcome is reflective of underlying performance.
A summary of the bonus outcome is as follows:
Executive % of maximum % of salary
Bonus
outcome
(£000)
Awarded
in cash
(£000)
Awarded
in shares
(£000)
M Ward 100 125 762 305 457
P Vincent 100 100 394 197 197
Fifty percent of the bonus and any amount in excess of 100% of salary will be used to purchase shares. Shares are subject to a minimum holding period of three years and are not subject
to continued employment.
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Vesting of 2020 LTIP awards
The performance conditions related to the 2020 LTIP award are due to vest as follows:
Performance Threshold target (25% vesting) Stretch target (100% vesting) Actual performance Vesting achieved
PBT 50% of total LTIP £97. 75 m £115 . 0 m £165.9m 100%
EPS 50% of total LTIP 29. 87p 35.14p 55.6p 100%
Total 100%
The Committee has fully considered the facts and circumstances of the awards and the performance delivered by the Group since its merger in 2020. Overall, the Committee considers that
the outcome of the 2020 award is fair in the context of exceptional performance and is not misaligned with shareholder experience. Accordingly, we have concluded that the vesting level is
fair and have not used discretion to scale back the awards. Further detail is provided in the Remuneration Committee Chairman’s letter.
The awards are due to vest in August 2023, subject to ongoing service conditions being met.
LTIP awards made during the year (audited)
On 13 July 2022, the following LTIP awards were granted to Executive Directors:
Type of award Basis of award granted Share price for award
Number of shares over
which award was granted Face value of award (£)
% of face value that would
vest on threshold
performance
Vesting determined by
performance over
M Ward Nil cost option 150% of salary of
£6 09,3 4 8
336.33p 271,763 914,022 25% Three financial years
to 30 April 2025
P Vincent Nil cost option 150% of salary of
£393,563
336.33p 175,525 590,345 25% As above
The share price for award was calculated based on a three day average prior to the award grant.
Weighting Threshold target (25% vesting) Stretch target (100% vesting) End measurement point
PBT 50% £165m £175m Final year of the
performance period
EPS 50% 52.6p 55.8p Final year of the
performance period
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Percentage change in remuneration levels
The table below sets out the percentage change in base salary, value of taxable benefits and bonus for all the Directors compared with the average percentage change for employees
of the Company.
Average percentage change 2022–2023 Average percentage change 2021–2022 Average percentage change 2020–2021
Salary Taxable benefits Annual bonus Salary Taxable benefits Annual bonus Salary Taxable benefits Annual bonus
M Ward 3% (4%) 3% 15% 12% 28% 620% 387% n/a
P Vincent 3% 21% 3% 13% 8% 8% 2% (14%) n/a
A Palmer-Baunack 0% n/a n/a 20% n/a n/a 31% n/a n/a
J Pattullo 18% n/a n/a 3% n/a n/a 5% n/a n/a
M Butcher 3% n/a n/a 3% n/a n/a 65% n/a n/a
J Davies
1
(73%) n/a n/a 3% n/a n/a 504% n/a n/a
Bindi Karia
2
n/a n/a n/a
M McCafferty 3% n/a n/a 3% n/a n/a 466% n/a n/a
N Rabson
3
n/a n/a n/a
Company employees (22%) 87% (31%) 44% (70%) 2015% (6%) 11% (87%)
The above table shows the movement in the salary, taxable benefits and annual bonus for Directors compared to that for the average employee of the Company (being Redde Northgate
plc) as required under legislation. It does not reflect the total average for the Group. As there are only a small number of employees in the Company, the average pay calculation can be
easily skewed by a change in composition of staff and this is the reason for the decrease in average salary and bonus during the year. The average increase in salary for the Group wider
workforce was 4.2%.
Annual bonus for Company employees is the amount paid in each year, whereas the Directors’ bonus is the amount earned in each period as the information on Company employees’ bonus
amounts is not available at the date of this report.
Payments to past Directors and payments for loss of office
John Davies stepped down as a Non-Executive Director of the Company on 6 May 2022. John Davies received a payment of £17,796 in accordance with the terms of his appointment and the
Policy.
Other than this payment, there were no payments to past Directors whether for loss of office or otherwise during FY2023.
CEO to employee pay ratio
The table on page 118 sets out the ratio of the CEO’s single figure of total remuneration to the total remuneration of the 25th percentile, median (50th percentile), and 75th percentile
remuneration of our UK employees, in line with the regulations.
1 John Davies left the Board on 6 May 2022.
2 Bindi Karia was appointed to the Redde Northgate plc Board on 5 May 2022.
3 Nicola Rabson was appointed to the Redde Northgate plc Board on 9 November 2022.
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Option A of the Companies (Miscellaneous Reporting) Regulations 2018 has been used to calculate the ratio as it was considered to provide the most accurate basis of calculation. Full-time
equivalent remuneration for all UK employees for the financial year has been used for pay periods across the year as adjusted for joiners and leavers. Total remuneration has been prepared
using the same methodology as the single figure table with the exception of the bonus. The bonus figure for employees is based on the amount paid in each year as the information on
employees’ bonus amounts is not available at the date of this report whereas the bonus included in the single figure table is the amount earned in each period.
Financial Year Method
25th percentile
pay ratio
Median pay
ratio
75th percentile
pay ratio
2023 Option A 185:1 153:1 108:1
2022 Option A 63:1 51:1 35:1
2021 Option A 57:1 45:1 30:1
2020 Option A 64:1 53:1 37:1
2019 Option A 47:1 3 8:1 26:1
Salary and total remuneration details for the relevant individuals are set out as follows:
CEO
£000
25th percentile
£000
Median
£000
75th percentile
£000
2023
Salary 609 23 27 35
Total remuneration 4,438 24 29 41
The employees at the 25th, 50th and 75th percentile have been determined by reference to average employee pay across the Group for the financial year being reported on.
Unlike the total remuneration for the majority of employees, total remuneration for the CEO is mostly dependent on length of tenure, business performance and share price movements over
time. As a result, the ratios may fluctuate significantly from year to year. For example no long term incentive was paid in 2022 but is a significant portion of the CEO’s total remuneration in 2023
due to the share price appreciation over the period and this is reflected in the pay ratio. This year the CEO’s salary has increased below the wider workforce salary increases.
The Committee has responsibility for setting the remuneration of the Executive Directors and other senior management and reviews the wider policies and practices for our workforce.
The Committee is satisfied that the median pay ratio is consistent with the Group’s pay, reward and progression policies.
Directors’ Remuneration Report continued
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Performance graph measured by TSR
The graph below illustrates the performance of Redde Northgate plc measured by Total Shareholder Return (share price growth plus dividends reinvested in shares) against a “broad equity
market index” over a rolling ten-year period (the period covered by the graph below is 30 April 2013 to 30 April 2023). Consistent with the approach adopted in previous years, we show
performance against the FTSE 250 (exc. investment trusts) of which we are a constituent. The mid-market price of the Company’s ordinary shares at 28 April 2023 was 376p (30 April 2022: 397p).
The range during the year was 283.5p to 437.5p.
50
100
150
200
250
300
04/2013 04/2014 04/2015 04/2016 0 4/2017 04/2018 04/2019 04/2020 04/2021 04/2022 04/2023
FTSE 250
Redde Northgate
Total remuneration for CEO
The total remuneration figure for the CEO during each of the previous ten financial years is as follows:
Year ended 30 April 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Total remuneration £000 628 1,138 1,214 821 490 1,032 1,319 1,200 1,440 4,438
Annual bonus (% of maximum) 43.6 90.3 34.1 – – 72.4 – – 100 100
Long term incentive (LTIP)
vesting (% of maximum) – 47.9 79.2 61.8 – – – – – 100
The total remuneration figure includes the annual bonus and LTIP awards which vested based on performance periods ending in those years. The annual bonus and LTIP percentages show the
pay-out for each year as a percentage of the maximum. In years when there was a change of CEO, the figures shown are the aggregate for the office holders during that year and include
any payments for loss of office.
Relative importance of spend on pay
2022 2023 % increase
Staff costs £000 2 2 7,74 4 270,776 19%
Dividends £000 43,897 52,220 19%
Share buybacks £000 7, 49 3 52,927 606%
The table above shows the movement in spend on staff costs versus that in dividends and share buybacks, reflecting a significant return of capital to our shareholders and our significantly
increased investment in the wider workforce.
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Outstanding share awards
The table below sets out details of Executive Directors’ outstanding share awards.
M Ward
Scheme Grant date
Exercise
price (p)
Shares under
option at
30 April 2022
Number of
options/
shares
granted
during the
year
Vested
during year
Exercised
during year
Lapsed
during year
Forfeited
during year
Number of
shares at
30 April 2023
End of original
performance
period Vesting date
Exercise
period
LTIP
3
13.08.20 Nil 778,315 – – – – – 778,315 30.04.23 13.08.23
13.08.23
– 13.08.30
LTIP
3
09.08.21 Nil 206,853 – – – – – 206,853 30.04.24 09.08.24
09.08.24
– 0 9.0 8. 31
LTIP
1
13 . 07. 2 2 Nil – 271,763 – – – – 271,76 3 30.04.25 13 . 07. 2 5
13 . 07. 2 5
– 13 .07. 32
Total 985,168 271,763 – – – – 1,256,931
P Vincent
Scheme Grant date
Exercise
price (p)
Shares under
option at
30 April 2022
Number of
options/
shares
granted
during the
year
Vested
during year
Exercised
during year
Lapsed
during year
Forfeited
during year
Number of
shares at
30 April 2023
End of original
performance
period Vesting date
Exercise
period
LTIP
2
24.0 9.19 Nil 2 7,95 5 – – 2 7,95 5 – – – 30.04.22 2 7. 07. 21
27.0 7. 21
– 2 7. 07. 2 8
LTIP
2
24.0 9.19 Nil 26,192 – 26,192 26,192 – – – 30.04.22 24.09.22
24.09.22
– 24.09.29
LTIP
3
13.08.20 Nil 476,382 – – – – – 476,382 30.04.23 13.08.23
13.08.23
– 13.08.30
LTIP
3
09.08.21 Nil 133,601 – – – – – 133,601 30.04.24 09.08.24
09.08.24
– 0 9.0 8. 31
LTIP
1
13 . 07. 2 2 Nil – 175,525 – – – – 175,525 30.04.25 13 . 07. 2 5
13 . 07. 2 5
– 13 .07. 32
Total 664,13 0 175, 525 26,192 54,147 – – 785,508
1 Performance targets as set out above.
2 A proportion of these awards were adjusted and forfeited following the Merger in order to remove the proportion not expected to vest based on forecast performance. No remaining performance conditions remain other than the
on-going service obligation.
3 Performance targets set out in prior year Annual Report and Accounts.
All outstanding awards are structured as nil-cost options.
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SAYE
The Board believes that encouraging wider share ownership by all staff will have longer term benefits for the Company and therefore introduced an SAYE (including international sub-rules
for our colleagues in Spain and Ireland) in 2020 with the first saving period commencing in February 2021 and a further savings period commencing in September 2022. The SAYE provides
an effective way of achieving that aim at no financial risk to employees.
Under the SAYE, employees choose to make monthly savings amounts (which are paid to a financial institution) in return for options to buy shares in the Company at the option price and using
savings accumulated over the savings period (typically three years). Employees can choose to cease saving and withdraw their money at any time allowing the related options to lapse.
Options over 1,468,754 shares were granted under the SAYE, on 5 August 2022, with approximately 1,000 employees contributing monthly savings under the schemes. The next offer to take part
in the SAYE scheme is expected to be made later in 2023.
The Executive Directors are entitled to participate in the SAYE, but the Non-Executive Directors cannot participate in the SAYE.
Philip Vincent was granted 6,691 options on 5 August 2022 at an option price of £2.69.
Share Incentive Plan: YourShare
During the year the Company adopted the Share Incentive Plan and the International Share Incentive Plan following shareholder approval received at our 2022 AGM. The Share Incentive
Plan like the SAYE plan is an all-employee plan with the operation of the International Share Incentive Plan entirely for those employees outside of the UK.
The Company offered a grant of free shares up to the value of £500 all Group employees in December 2022. 753,125 shares were granted under the Share Incentive Plan and 163,250 shares
were granted under the International Share Incentive Plan, with approximately 7,400 employees participating under both schemes. The next offer to take part in the Share Incentive Plan is
expected to be made later in 2023.
The Executive Directors are entitled to participate in the Share Incentive Plan, but the Non-Executive Directors cannot participate in this scheme. Martin Ward and Philip Vincent were both
granted 125 free shares each on 7 December 2022.
Sourcing of shares
A combination of newly-issued, treasury and market purchase shares (using a Guernsey employee benefit trust) may be used to satisfy the requirements of the Group’s existing share schemes.
Overall plan limits and clawback
All the Company’s share schemes operate within the following limits: in any 10 calendar year period, the Company may not issue (or grant rights to issue) more than:
a. 10% of the issued ordinary share capital under all the share plans; and
b. 5% of the issued ordinary share capital under the executive share plans (LTIP, DABP and MPSP).
The dilution position as at 30 April 2023 was 1.8% under the LTIP, MPSP and DABP, and 1.2% under the SAYE and 0.3% under the Share Incentive Plan.
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Directors’ shareholding and share interests
The Executive Directors are required to build up a shareholding equivalent to 200% of salary, to be achieved primarily through the retention, after tax, of shares acquired on exercise of options
granted under the LTIP and shares acquired through bonus deferral, until such time as their share ownership requirement has been met. Directors are not required to go into the market to
purchase shares, although market purchases are encouraged and any shares so acquired would count towards meeting the guidelines.
The Chairman and Non-Executive Directors do not have a shareholding guideline although the holding of shares in the business is encouraged. Details of the Directors’ interests in shares are
shown in the table below:
Share interests (audited)
Number of shares:
Beneficially
owned at
30 April 2023
Vested but not
exercised LTIP Unvested LTIP
% shareholding
guideline
achieved at
30 April 2023
M Ward 1,716,180 – 1,256,931 Fully met
P Vincent 143,214 – 785,508
Not fully met
(68% of
guideline)
A Palmer-Baunack 110, 4 42 – – N/A
J Pattullo 50,000 – – N/A
M Butcher 24,676 – – N/A
J Davies – – – N/A
B Karia – – – N/A
M McCafferty 11, 0 07 – – N/A
N Rabson – – – N/A
Martin Ward has met the shareholding policy guideline as he holds shares with a value in excess of 200% of basic annual salary.
Philip Vincent has not yet met the shareholding guideline given the levels of variable pay awards vesting since his appointment on 16 July 2018.
Martin Ward’s shareholding includes 107,076 shares from awards in July 2022 and July 2021 under the EAB annual bonus scheme and 125 shares awarded under the 2022 SIP. Philip Vincent’s
shareholding includes 68,735 of shares from awards in July 2022, July 2021 and September 2020 under the EAB annual bonus scheme, and 125 shares awarded under the 2022 SIP. The EAB
shares vested immediately but are held in trust for three years following the date of award in accordance with the scheme rules.
No changes in the above interests have occurred between 30 April 2023 and the date of this report.
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The Remuneration Committee
The members of the Committee during the year are listed below. The attendance of the members of the Committee at meetings during the year are shown below.
Number of meetings attended
out of potential maximum
available to attend
John Pattullo (Chairman) 6 of 6
Mark Butcher 6 of 6
Bindi Karia 6 of 6
Avril Palmer-Baunack 6 of 6
Nicola Rabson 2 of 2
The CEO and CFO attend meetings by invitation and assist the Committee in its deliberations, except when issues relating to their remuneration are discussed. No Directors are involved in
deciding their own remuneration. The Company Secretary acts as secretary to the Committee.
Remuneration advisers
Korn Ferry provided independent advice to the Committee until 5 July 2022 having been appointed by the Committee in FY2019. Until this date, Korn Ferry provided advice to the Committee
on certain remuneration matters. The total fees paid to Korn Ferry in respect of its services to the Committee during the year were £6,195 excluding VAT. The fees are predominantly charged
on a time spent basis.
In 2022, the Committee reviewed its Remuneration Advisory arrangements and conducted a competitive selection process to appoint a new remuneration adviser to the Committee. Korn
Ferry was invited to participate in this process and the Committee remains appreciative of the services Korn Ferry has provided since 2019. Following the selection process, the Committee is
pleased to confirm that it has appointed Deloitte LLP as remuneration adviser to the Committee on 6 September 2022. Since its appointment, Deloitte LLP has provided independent advice
to the Committee on certain remuneration matters. The total fees paid to Deloitte LLP in respect of its services to the Committee during the year were £49,000 excluding VAT. The fees are
charged on a time spent and expenses basis.
Each of Deloitte LLP and Korn Ferry is a signatory to the Remuneration Consultants’ Code of Conduct. Korn Ferry continues provide advice on talent and reward matters and Board
appointments to the Group through a separate team and has no other connection to the Company or Directors. During the year Deloitte LLP did not provide any other services to the
Company. The Committee is satisfied that advice received from Deloitte during the year was objective and independent and that all individuals who provided remuneration advice to the
Committee had no connections with Redde Northgate or its Directors that may impair their independence. The Committee’s terms of reference are available on the Company’s website:
www.reddenorthgate.com
The Committee is responsible for making recommendations to the Board on the remuneration packages and terms and conditions of employment of the Chairman and the Executive
Directors of the Company, as well as the Company Secretary and under the new Code the most senior executives below Board level in the UK, Spain and Ireland. The Committee also reviews
remuneration policies and practices generally throughout the Group. In accordance with the Policy, the Committee has sought to ensure that the incentive structure will not raise ESG risks by
inadvertently motivating irresponsible behaviour and will take account of ESG matters generally in determining overall Remuneration Policy and structure, and the Committee is able to
consider corporate performance on ESG issues when setting the Executive Directors’ annual objectives and remuneration.
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Statement of shareholder voting and shareholder feedback
The following table sets out the votes received from shareholders for the Directors’ Remuneration report at the 2022 AGM:
Directors’ Remuneration Report 2022 – Resolution 3
Total number
of votes
Percentage
of votes
% of votes cast
For 191,110, 4 60 98.85
Against 2 ,217, 0 31 1.15
Total votes cast (excluding votes withheld) 193,327,491
Votes withheld 1,078,494
Total votes cast (including votes withheld) 194,405,985
The following table sets out the votes received from shareholders for the Policy at the 2020 AGM:
Directors’ Remuneration Policy 2020 – Resolution 4
Total number
of votes
Percentage
of votes
% of votes cast
For 115 ,101,869 58.98
Against 80,054,014 41.02
Total votes cast (excluding votes withheld) 195,155,883
Votes withheld 30,065
Total votes cast (including votes withheld) 195,185,948
Votes withheld are not included in the final proxy figures as they are not recognised as a vote in law.
We gained support at our 2020 AGM for the amendments made to the Policy and the Policy became effective from that time. We recognise, however, that there were significant votes against
the resolution reflecting shareholder concerns with the Policy, namely the pension and the proposed Value Creation Plan.
During FY2021 we consulted with shareholders to discuss their concerns and based on the feedback received, the Committee moved to align Executive Director pension with the majority
of the workforce by 31 December 2022 and to cancel the proposed VCP.
A revised Policy will be proposed for approval by shareholders at the Company’s 2023 AGM, following extensive shareholder engagement and on the basis set out in this report.
Approval
This Annual Report on remuneration has been approved by, and signed on behalf of, the Board of Directors.
John Pattullo
Chairman of the Remuneration Committee
5 July 2023
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Report of the Directors
The Directors present their
report and the audited
consolidated accounts for
the year ended 30 April 2023.
Results and preparation
Details on financial performance and
dividends can be found in the Strategic
Report from pages 1 to 76.
This report has been prepared in
accordance with the requirements outlined
within The Large and Medium-sized
Companies and Groups (Accounts and
Reports) Regulations 2008 and forms part
of the management report as required under
Disclosure Guidance and Transparency
Rule (DTR) 4. This section, together with the
Strategic Report, the Corporate Governance
section on pages 77 to 129 and the other
sections of the Annual Report and Accounts
as referred to herein, fulfils the requirements
of the Directors’ report.
Strategic Report
The Strategic Report on pages 1 to 76 was
approved by the Board on 5 July 2023 and
is incorporated into this Directors’ report
by reference.
Close company status
So far as the Directors are aware, the close
Company provisions of the Income and
Corporation Taxes Act 2010 do not apply
to the Company.
Articles of Association
The rights and obligations attached to the
Company’s ordinary shares are set out in the
Company’s Articles of Association, copies of
which can be obtained from Companies
House in the UK or by writing to the Company
Secretary. With regard to the appointment
and replacement of Directors, the Company
is governed by the Articles, the UK Corporate
Governance Code, the Companies Act 2006
(the “CA 2006”) and related legislation. The
powers of Directors are set out in the Articles.
Share capital
Details of the issued share capital, together
with details of any movements during the
year, are shown in Note 24 to the financial
statements. The Company has one class of
ordinary share, which carries no right to
fixed income. Each ordinary share carries
the right to one vote at general meetings
of the Company.
The Company has also issued cumulative
preference shares of 50p each that entitle
the holder to receive a cumulative
preferential dividend at the rate of 5% on the
paid-up capital and the right to a return of
capital at either winding up or a repayment
of capital. The cumulative preference shares
do not entitle the holders to any further or
other participation in the profits or assets
of the Company.
The percentage of the issued nominal value
of the ordinary shares is 98.3% (2022: 98.3%)
of the total issued nominal value of all share
capital.
Share rights
Subject to the provisions of the CA 2006
and without prejudice to any rights attached
to any existing shares or class of shares,
any share may be issued with such rights or
restrictions as the Company may by ordinary
resolution determine or, subject to and in
default of such determination, as the Board
shall determine. The Company’s shares
when issued are credited as fully paid
and free from all liens, equities, charges,
encumbrances and other interests.
No shareholder shall be entitled to vote at a
general meeting, either in person or by proxy,
in respect of any share held by them unless
all monies presently payable by them in
respect of that share have been paid. In
addition, no shareholder shall be entitled to
vote, either in person or by proxy, if they have
been served with a notice under section 793
of the CA 2006 (concerning interests in those
shares) and has failed to supply the
Company with the requisite information.
Other than restrictions considered to
be standard for a UK listed Company
(for example, restrictions on partly paid
certificated shares), There are no specific
restrictions on the size of a holding nor on the
transfer of shares in the Company, which are
both governed by the general provisions of
the Articles of Association (the Articles) and
prevailing legislation. The Directors are not
aware of any agreements between holders
of the Company’s shares that may result in
restrictions on the transfer of securities or
on voting rights.
Details of employee share schemes are set
out in the Directors’ Remuneration Report.
Shares held by the Company’s Share Schemes
Trustees are voted on the instructions of the
employees on whose behalf they are held.
Shares in the Guernsey Trust are voted at the
discretion of the Trustees.
No person has any special rights of control
over the Company’s share capital and all
issued shares are fully paid.
Directors’ interests
Details of the Directors’ interests in shares are
set out in the Directors’ Remuneration Report
on pages 98 to 124. No Company in the
Group was, during or at the end of the year,
party to any contract of significance in which
any Director was materially interested. The
Directors are not aware of any agreements
between the Company and its Directors or
employees that provide for compensation
for loss of office or employment that occurs
because of a change of control.
Authority to issue shares
Subject to the provisions of the CA 2006
and without prejudice to any rights attached
to any existing shares or class of shares, any
share may be issued with such rights or
restrictions as the Company may by ordinary
resolution determine or, subject to and in
default of such determination, as the Board
shall determine.
The authority conferred on the Directors
at last year’s AGM to allot shares in the
Company up to a maximum nominal
amount of £39,929,205 (representing 33.3%
of the issued share capital of the Company
(excluding treasury shares) as at the latest
practicable date before publication of the
Notice of the Company’s last AGM) and, in
connection with a pre-emptive offer to
existing shareholders by way of a rights issue,
to allot additional shares in the Company up
to a maximum nominal amount of
£39,929,205 (representing a further 33.3% of
the issued share capital of the Company
(excluding treasury shares) as at the latest
practicable date before publication of the
Notice of the Company’s last AGM), expires
on the date of the forthcoming AGM.
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Shareholders will be asked to give a similar
authority to allot shares at the forthcoming
AGM.
The authority conferred on the Directors
at last year’s AGM to allot shares in the
Company and/or to sell ordinary shares
held by the Company as treasury shares
for cash as if the pre-emption provisions
of Section 561(1) of the CA 2006 did not
apply, limited to:
• firstly, an aggregate nominal amount
of £5,989,380, representing approximately
5% of the current issued ordinary share
capital; and
• secondly, a further 5% of the Company’s
ordinary share capital, provided that
this additional power is only used in
connection with acquisitions and
specified capital investments which are
announced contemporaneously with
the issue or which have taken place in
the preceding six month period and
are disclosed in the announcement
of the issue, will expire at the end of the
Company’s next AGM or, if earlier, at the
close of business on 27 December 2023.
The Company will, at the 2023 AGM, seek
authority to allot shares in line with the new
guidance issued by the Pre-Emption Group
of the Financial Reporting Council that
issuers may disapply pre-emption rights over
up to 10% of the Company’s issued ordinary
share capital and a further 2% follow-on
offer and seek further authority to disapply
pre-emption rights for up to an additional
10% for certain acquisitions or specified
capital investments and a further 2%
follow-on offer.
Authorities to purchase shares
The authorities for the Company to purchase
in the market up to: (i) 23,957,523 of its ordinary
shares (representing 10% of the issued share
capital of the Company as at the latest
practicable date before publication of the
Notice of the Company’s last AGM); and
(ii) 1,000,000 of its preference shares (being
all of its preference shares remaining in issue),
in each case granted at the Company’s last
AGM, expire on the date of the forthcoming
AGM. Shareholders will be asked to give
similar authorities to purchase shares at the
forthcoming AGM.
Shares purchased by the Company
The Group’s objective is to employ a
disciplined approach to investment, returns
and capital efficiency to deliver sustainable
compounding growth. Reflecting this
approach and in light of the Company’s
substantial headroom under its facilities
and target leverage, on 15 March 2022 )
the Company launched a share buyback
programme of the Company’s ordinary
shares for up to a maximum aggregate
consideration of £30m (the Programme). The
share buyback programme was extended
on 10 August 2022 by a further £30m, up to a
maximum aggregate consideration of £60m.
Under the Programme the repurchased
ordinary shares are held in treasury.
Interests in shares
As at 30 April 2023, the Company is aware
of the following persons who, either directly
or indirectly, hold 3% or more of the issued
share capital of the Company:
30 April
2023 %
FIL Limited* 17,5 31,012 7. 6 5
Lombard Odier
Investment Managers* 16, 8 07,9 04 7. 3 3
Aberforth Partners* 16,346,290 7.13
Schroders plc** 14,398,674 6.28
BlackRock* 11,438,607 4.99
Vanguard Group* 10,883,731 4.75
Dimensional Fund
Advisors* 9,8 41,994 4.29
JO Hambro Capital
Management* 9,175,135 4.00
Artemis Investment
Management* 8,044,455 3.51
Jamus Henderson
Investors* 8,027,107 3.50
LSV Asset Management* 7,47 1,92 2 3.26
* Information obtained from the Company’s share
register analysis.
** In the period from 30 April 2023 to 5 July 2023,
the Company received a further notification
from Schroders plc disclosing that its holding
had decreased to 11,442,176 ordinary shares
(4.99% of the total voting rights in the Company).
Directors
The names of the Directors who served
on the Board during the year are set out
on pages 84 to 85, other than John Davies
who stepped down from the Board on
6 May 2022, and are incorporated into this
Directors’ Report by reference. Director
Resolutions to reappoint each of the
Directors in office at the date of this report
will be proposed at the AGM. Termination
provisions in respect of Executive Directors’
contracts can be found in the Directors’
Remuneration Report, starting on page 98.
Directors’ indemnities
As permitted by the Company’s Articles,
qualifying third party indemnities for each
Director of the Company were in place
throughout their periods of office during
the year and, for those currently in office,
remained in force as at the date of signing
of this report.
The Company’s Articles are available on
the Company’s website:
www.reddenorthgate.com
Disabled employees
The Group welcomes and gives full and fair
consideration to applications for employment
from persons with a disability (both visible and
non-visible). Our focus is on providing the
right tools to support both current and future
employees to be successful in the workplace.
The Group assists employees who have a
disability with training, career development
and progression opportunities and, in a
situation where an existing employee
develops a disability, our approach is to
provide continuing support and training
wherever possible. Where changes to
working practices or structure affect
employees, they are consulted and given
the appropriate assistance.
Report of the Directors continued
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Report of the Directors continued
Employee and other
stakeholder engagement
We are committed to ensuring that we can
create a safe and inclusive environment for
our people and we continue to work with the
Group to ensure our commitments are well
implemented across all areas of the Group.
All employees are provided with information
on matters of concern to them in their work,
through regular briefing meetings and
internal publications. To inform employees of
the economic and financial factors affecting
our business, regular updates are posted on
our intranet and we receive internal wide
communications of matters of interest from
the Chief Executive Officer. Alongside this,
information is cascaded to employees
through senior management, also boosting
employee engagement.
Details on how the Directors have discharged
their duties under Section 172(1) of the CA
2006 are included on pages 72 to 76.
Future developments
Details of likely future developments
affecting the Group are included within the
CEO review on pages 24 to 26 and included
within Our strategy on pages 17 to 19.
Dividends
Subject to approval, the Directors are
recommending a final dividend of 16.5p
per share (2022: 15.0p) which will be paid
on 29 September 2023 to shareholders on
the register as at close of business on
1 September 2023.
Political donations
No political donations were made by any
Group Company in the year.
Subsidiaries
As a Group our interests and activities are
operated through subsidiaries in the UK,
Spain, and Ireland, and are subject to the
laws and regulations of these jurisdictions.
There are no overseas branches.
Significant agreements
The Group’s financing facilities and share
plans are subject to change of control
provisions (see Note 9 (Borrowings) in the
financial statements).
Research and development
The Group carries out research and
development necessary to support its
principal activities as a mobility solutions
provider.
Energy and carbon reporting
The disclosures regarding greenhouse gas
emissions, energy consumption and energy
efficiency actions included in the CA 2006
(Strategic Report and Directors’ Report)
Regulations 2018 are included in the Impact
focus section of the Strategic Report on
pages 58 to 61.
Directors’ Remuneration Report
The Directors’ Remuneration Report contains:
• a statement by John Pattullo, Chairman
of the Remuneration Committee;
• the Directors’ Remuneration Policy; and
• the Annual report on remuneration, which
sets out payments made in the financial
year ended 30 April 2023.
The statement by the Chairman and
Annual report on remuneration will be put
to an advisory shareholder vote by ordinary
resolution.
The Directors’ Remuneration Report can be
found on pages 98 to 124 and is incorporated
in this Directors’ report by reference.
Disclosure of information under
Listing Rule 9.8.4
Dividend waiver arrangements are in place
for the employee trusts.
Section Topic Location
1 Interest capitalised N/A
2 Publication of unaudited financial information N/A
3 Details of long term incentive schemes This can be found in the Directors’ Remuneration Report on pages 98 to 124.
4 Waiver of emoluments by a Director N/A
5 Waiver of future emoluments by a Director N/A
6 Non pre-emptive issues of equity for cash N/A
7 As item (6), in relation to major subsidiary undertakings N/A
8 Parent participation in a placing by a listed subsidiary N/A
9 Significant agreements This can be found on page 127 of the Directors’ Report.
10 Provision of services by a controlling shareholder N/A
11 Shareholder waivers of dividends N/A
12 Shareholder waiver of future dividends N/A
13 Agreements with controlling shareholders N/A
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Length of notice of
general meetings
The minimum notice period permitted by
the CA 2006 for general meetings of listed
companies is 21 days, but the Act provides
that companies may reduce this period to
14 days (other than for AGMs) provided that
two conditions are met. The first condition
is that the Company offers a facility for
shareholders to vote by electronic means.
This condition is met if the Company offers
a facility, accessible to all shareholders, to
appoint a proxy by means of a website.
A separate notice of AGM has been issued
to all shareholders which includes details of
the Company’s arrangements for electronic
proxy appointment. The second condition
is that there is an annual resolution of
shareholders approving the reduction of
the minimum notice period from 21 days
to 14 days.
A resolution to approve 14 days as the
minimum period of notice for all general
meetings of the Company other than
AGMs will be proposed at the AGM. The
approval will be effective until the Company’s
next AGM, when it is intended that the
approval be renewed.
It is the Board’s intention that this authority
would not be used as a matter of routine
but only when merited by the circumstances
of the meeting and in the best interests
of shareholders.
Financial instruments
Details of the Group’s use of financial
instruments are given in the Financial review
on pages 30 to 37 and in Note 30 to the
financial statements.
Important events
Details of important events affecting the
Company since the end of the financial
year are set out in Note 32 of the financial
statements on page 193.
Auditors
In the case of each of the persons who
are Directors of the Company at the date
when this report was approved:
• so far as each of the Directors is aware,
there is no relevant audit information
of which the Company’s auditors are
unaware; and
• each of the Directors has taken all the
steps that they ought to have taken as
a Director to make himself aware of any
relevant audit information (as defined)
and to establish that the Company’s
auditors are aware of that information.
This confirmation is given and should be
interpreted in accordance with the provisions
of Section 418 of the CA 2006.
A resolution for the appointment of PwC as
auditors of the Company will be proposed
at the forthcoming AGM. This proposal is
supported by the Audit Committee.
The Directors’ Report, comprising the
Corporate Governance Report and the
reports of the Audit, Nominations and
Remuneration Committees, has been
approved by the Board and signed on
its behalf.
By order of the Board
James Kerton
Company Secretary
5 July 2023
Report of the Directors continued
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Redde Northgate plc
Annual Report and Accounts 2023
Statement of Directors’ responsibilities in respect of the financial statements
The Directors are responsible
for preparing the Annual
Report and the financial
statements in accordance
with applicable law and
regulation.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
have prepared the Group financial
statements in accordance with UK-adopted
international accounting standards and the
Company financial statements in
accordance with United Kingdom Generally
Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising
FRS 101 “Reduced Disclosure Framework”,
and applicable law).
Under Company law, Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group and
Company and of the profit or loss of the
Group for that period. In preparing the
financial statements, the Directors are
required to:
• select suitable accounting policies
and then apply them consistently;
• state whether applicable UK-adopted
international accounting standards have
been followed for the Group financial
statements and United Kingdom
Accounting Standards, comprising FRS 101
have been followed for the Company
financial statements, subject to any
material departures disclosed and
explained in the financial statements;
• make judgements and accounting
estimates that are reasonable and
prudent; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the Group
and Company will continue in business.
The Directors are responsible for safeguarding
the assets of the Group and Company and
hence for taking reasonable steps for the
prevention and detection of fraud and
other irregularities.
The Directors are also responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group’s
and Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the group and Company
and enable them to ensure that the financial
statements and the Directors’ Remuneration
Report comply with the CA 2006.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
Each of the Directors, whose names
and functions are listed in the Corporate
Governance section confirm that, to the
best of their knowledge:
• the Group financial statements, which
have been prepared in accordance with
UK-adopted international accounting
standards, give a true and fair view of
the assets, liabilities, financial position
and profit of the Group;
• the Company financial statements, which
have been prepared in accordance with
United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair
view of the assets, liabilities and financial
position of the Company; and
• the Report of the Directors includes
a fair review of the development and
performance of the business and the
position of the Group and Company,
together with a description of the principal
risks and uncertainties that it faces.
In the case of each Director in office at the
date the Directors’ report is approved:
• so far as the Director is aware, there is
no relevant audit information of which
the Group’s and Company’s auditors
are unaware; and
• they have taken all the steps that they
ought to have taken as a Director in
order to make themselves aware of
any relevant audit information and to
establish that the Group’s and Company’s
auditors are aware of that information.
By Order of the Board
Martin Ward
Chief Executive Officer
5 July 2023
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Independent auditors’ report to the members of Redde Northgate plc
Report on the audit of the financial statements
Opinion
In our opinion:
• Redde Northgate plc’s group financial statements and company financial statements (the “financial statements”) give a true and fair view of the state of the group’s and of the
company’s affairs as at 30 April 2023 and of the group’s profit and the group’s cash flows for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions
of the Companies Act 2006;
• the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework”, and applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated and Company Balance sheets as at 30 April 2023; the Consolidated income
statement, the Consolidated statement of comprehensive income, the Consolidated cash flow statement and the Consolidated and Company Statements of changes in equity for the year
then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’
responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard,
as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in Note 6, we have provided no non-audit services to the company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
• The Group is organised into 30 reporting components and the Group financial statements are a consolidation of these reporting components.
• Of the 30 components we identified four which, in our view, required a full scope audit either due to their size or risk characteristics, two of these were audited by the Group
engagement team.
• There is one significant component based overseas, Northgate España Renting Flexible S.A, and one other in the UK, Auxillis Services Limited, which have been audited by PwC
component auditors.
• Specific audit procedures were performed over a further four reporting components due to their contributions to the financial statement line items in the Group financial statements.
These include procedures over cash and bank balances, external loans, interest costs, dividends paid, property, plant and equipment, lease liabilities, operating expenses, depreciation,
interest in associates and payroll costs.
• As a result of this scoping we obtained coverage over 78% of the consolidated revenues and 78% of the consolidated profit before tax and exceptional items.
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Key audit matters
• Determining appropriate depreciation rates for vehicle assets held for hire (group).
• Claims due from insurance companies and self-insuring organisations, incorporating revenue recognition (group).
• Recoverability of investments in subsidiary undertakings and amounts owed by subsidiary undertakings (parent).
Materiality
• Overall group materiality: £9,600,000 (2022: £7,500,000) based on 5% of profit before tax and exceptional items.
• Overall company materiality: £15,600,000 (2022: £15,000,000) based on 1% of total assets.
• Performance materiality: £7,200,000 (2022: £5,625,000) (group) and £11,700,000 (2022: £11,250,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the
most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Determining appropriate depreciation rates for vehicle assets held for hire (group)
The Group has a total of £1,163.6m (2022: £997.0m) of vehicle assets held for hire
with a depreciation charge totalling £152.7m (2022: £174.6m). The Group adopts
an accounting policy that uses depreciation rates based on estimated useful lives
with the anticipation that the net book value of these vehicle assets approximates to
their market value at the time of disposal. This policy seeks to minimise any significant
gains or losses upon disposal of the vehicle assets. This policy requires management
to make an estimate of what the residual value will be at the time of disposal.
Determining likely residual values for future vehicle disposals is judgemental and
requires a number of judgments and estimates to be made, including the age,
condition and expected future market conditions, such as forecast levels of supply
and demand. Further explanation is included in the Group’s critical accounting
judgements and key sources of estimation uncertainty in Note 3 and the Report of
the Audit Committee on pages 93 to 97. The disclosures in respect of vehicle assets
held for hire are shown in Notes 2, 3 and 14.
We have obtained management’s model to support the depreciation rates selected and confirmed its
mathematical accuracy. We challenged management’s assumptions of expected future market values
of hire vehicles, taking into account the various judgements used in the calculation of future residual
values. We have also considered how future average prices correlate with expectations around vehicle
supply and have corroborated management’s expectations of vehicle supply and demand against
external third-party industry reports. In addition we performed sensitivities on the residual values used
by management. We performed detailed testing of the calculations supporting the estimates and
judgements taken by management, including comparison to recent actual market prices achieved on
disposal of similar vehicles. We challenged management’s assumptions in respect of the future changes
to the vehicle hire fleet, including expected infleets, defleets and purchase pricing. We have tested
the actual outturn in the year against management judgements as part of our lookback procedures.
We also considered the adequacy of the Group’s disclosures in respect of the estimation uncertainty
in setting appropriate depreciation rates. Based on the procedures performed, we were able to obtain
sufficient audit evidence in respect of the judgements and estimates applied by management in
determining the depreciation rates used.
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Independent auditors’ report to the members of Redde Northgate plc continued
Key audit matter How our audit addressed the key audit matter
Claims due from insurance companies and self-insuring organisations,
incorporating revenue recognition (group)
Within the Redde operating segment the Group recognises contract assets
amounting to £240.6 million (2022: £193.8 million) on claims due from insurance
companies and self-insuring organisations which are subject to the insurance claims
being settled. Included within this balance is revenue recognised on non-protocol
claims which represents variable consideration and is subject to a variable
consideration adjustment which takes into account the settlement risk. This includes
historical and expected collection rates, as well as the aged profile of amounts due.
The assumptions underlying the calculation of the variable consideration
adjustment, as well as the adjustments made, involve significant judgement and
therefore impact both the carrying value of the associated assets and revenue
recognised in relation to the associated claims. We determined that the valuation
of outstanding claims, which incorporates the variable consideration adjustment,
has a high degree of estimation uncertainty, with a potential range of reasonable
outcomes greater than our materiality for the financial statements as a whole, and
possibly many times that amount. Further explanation of the estimation uncertainty
is included in the critical accounting judgements and key sources of estimation
uncertainty in Note 3 and the Report of the Audit Committee on pages 93 to 97.
We assessed the accounting policy and approach to recognising revenue to ensure it was consistent
with the principles of IFRS 15 ‘Revenue from contracts with customers’ and in particular variable
consideration. We reperformed the calculation within the model from the input data such as the ageing
and recovery rates. We assessed and challenged the key assumptions used by management to derive
the variable consideration adjustment, taking into account historical collection rates for individual
insurers for each category of claim and any outliers within the data. We assessed whether there was
any contradictory evidence which could call into question the assumptions made and we corroborated
explanations provided to supporting information or evidence. We formed an independent view of the
adequacy of the variable consideration adjustment, by obtaining invoice and settlement data since
April 2016. We used this data to analyse the historical collection performance of monthly cohorts of
invoices for each category of claim and derive an expectation of the potential settlement of claims
outstanding at the balance sheet date. We also requested management perform a look back test, by
assessing the outcome of cash settlements in the period against the assumptions made in determining
the variable consideration adjustment at the previous balance sheet date. Using the historical recovery
rates and aging profiles we calculated an auditors range as of the expected provision required.
The results of this look back test have been disclosed in the financial statements within Note 17,
receivables and contract assets. We have considered the adequacy of the disclosures in respect
of estimation uncertainty included within the financial statements. Based on the procedures above,
we concluded that the level of the provision held at the balance sheet date is reasonable.
Recoverability of investments in subsidiary undertakings and amounts owed by
subsidiary undertakings (parent)
The Company has significant investments in respect of acquisitions made across
various subsidiaries amounting to £447.9m (2022: £445.6m) and amounts owed from
subsidiary undertakings amounting to £1,111.5m (2022: £1,053.6m). The recoverable
amount of the subsidiary is impacted by various factors, a number of which are
outside of Redde Northgate’s control, which could affect whether results are in
line with expectations. Where a subsidiary has been subject to poor historical
performance, there is a risk around the recoverability of this investment. There is
inherent uncertainty and judgement in forecasting future cash flows, and therefore
this is a particularly judgement area of the audit. Amounts due from Group
undertakings are considered as part of management’s IFRS 9 expected credit loss
assessment. The disclosures in respect of investments in subsidiary undertakings
and amounts owed by subsidiary undertakings are shown in Notes 2, 4 and 5.
We evaluated and challenged management’s process for assessing impairment triggers for investments
in subsidiary undertakings and management’s IFRS 9 expected credit loss assessment in respect of
amounts owed by subsidiary undertakings. We have undertaken the following in respect of the
investment in subsidiary undertakings:
• Compared historical performance to historical forecasts to assess accuracy in the budget process;
• We engaged with PwC experts to assess the discount rate;
• We assessed the reasonableness of the revenue and EBITDA assumptions and performed sensitivity
analysis on the forecasts, including downside scenarios to assess headroom; and
• Assessed the Group’s budgeting procedures as a basis for value in use calculations.
We have considered management’s approach to the expected credit loss assessment of each of the
counterparty balances and the risk of default. We have also considered the adequacy of the disclosures
in respect of investments in subsidiary undertakings and amounts receivable from subsidiary undertakings.
We are satisfied with management’s conclusion on the carrying value of investments and amounts due
from subsidiary undertakings.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the
group and the company, the accounting processes and controls, and the industry in which they operate.
The Group is organised into 30 reporting components and the Group financial statements are a consolidation of these reporting components. The reporting components vary in size and
we identified four components, in the UK and Spain, that required a full-scope audit of their financial information due to either their size or risk characteristics, two of these were audited
by the Group engagement team. There is one significant component based overseas, Northgate España Renting Flexible S.A, and one in the UK, Auxillis Services Limited, which have been
audited by PwC component auditors.
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Audit procedures were performed over a further four reporting components due to their contributions to the financial statement line items in the Group financial statements. These include
procedures over cash and bank balances, external loans, interest costs, dividends paid, property, plant and equipment, lease liabilities, operating expenses, depreciation, interest in associates
and payroll costs. All other audit work was completed by the Group audit team. On the remaining components we performed analytical procedures to respond to any potential risks of material
misstatement to the Group.
Our audit scope was determined by considering the significance of each component’s contribution to profit before tax and exceptional items, and individual financial statement line items,
with specific consideration to obtaining sufficient coverage over significant risks. As a result of this scoping we obtained coverage over 78% of the consolidated revenues and 78% of the
consolidated profit before tax and exceptional items. The Group engagement team were significantly involved at all stages of the component audits by virtue of numerous communications
throughout, including the issuance of detailed audit instructions and review and discussions of the audit approach and findings, in particular over our areas of focus. The Group audit team
met with local management and the component audit teams and attended their clearance meetings. In addition, we reviewed the component team reporting results and their supporting
working papers, which together with the additional procedures performed at Group level, gave us the evidence required for our opinion on the financial statements as a whole. Our audit
procedures at the Group level included the audit of the consolidation, goodwill and other intangible assets, investments in associates, income and deferred taxation and certain aspects
of IFRS 16 ‘Leases’. The Group engagement team also performed the audit of the Company.
The impact of climate risk on our audit
Climate change is expected to present both risks and opportunities for the Group. As explained in the Sustainability section of the Strategic Report, the Group is mindful of its impact on the
environment and is focussed on ways to reduce climate-related impacts as management continues to develop its plans towards a net zero pathway by 2050. Management’s climate change
initiatives and commitments will impact the Group in a variety of ways, and while the Group has started to quantify some of the impacts that may arise on its net zero pathway, the future
financial impacts are clearly uncertain given the medium to long term horizon. Disclosure of the impact of climate change risk based on management’s current assessment is incorporated
in the Task Force on climate related financial disclosures (‘TCFD’) section of the Annual Report.
As part of our audit, we made enquiries of management to understand the extent of the potential impact of climate change on the Group’s business and the financial statements, including
reviewing management’s climate change risk assessment which was prepared with support from an external expert. We used our knowledge of the Group to evaluate the risk assessment
performed by management.
We assessed that the key areas in the financial statements which are more likely to be materially impacted by climate change are those areas that are based on future cash flows. As a result,
we particularly considered how climate change risks and the impact of climate commitments made by the Group could impact the assumptions made in the forecasts prepared by
management that are used in the Group’s impairment analysis and for going concern purposes. We challenged how management had considered longer term physical risks such as severe
weather related impacts, and shorter-term transitional risks such as policy changes in fuel subsidies and limited supply of EVs and hybrids. Our procedures did not identify any material impact
on our audit for the year ended 30 April 2023. We also checked the consistency of the disclosures in the TCFD section of the Annual Report with the relevant financial statement disclosures,
including the going concern section of the accounting policies, and with our understanding of the business and knowledge obtained in the audit.
We confirmed with management and the Audit Committee that the estimated financial impacts of climate change will be reassessed prospectively and our expectation is that climate
change disclosures will evolve as the understanding of the actual and potential impacts on the Group’s future operations are established with greater certainty.
Independent auditors’ report to the members of Redde Northgate plc continued
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Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £9,600,000 (2022: £7,500,000). £15,600,000 (2022: £15,000,000).
How we determined it 5% of profit before tax and exceptional items 1% of total assets
Rationale for benchmark
applied
Based on the benchmarks used in the Annual Report, profit before tax
and exceptional items is the primary measure used by the shareholders
in assessing the performance of the Group, and is a generally accepted
auditing benchmark. We have chosen this as our benchmark as it is a key
performance measure disclosed to users of the financial statements. This
figure takes prominence in the Annual Report, as well as the communications
to both the shareholders and the market, and an element of management
remuneration is linked to this performance measure. Based on this it is
considered appropriate to use the adjusted profit before tax figure for
the year as an appropriate benchmark.
We believe that total assets are considered to be appropriate as it is not a profit
oriented company. The Company is a non-trading holding company only and
therefore total assets is deemed a generally accepted auditing benchmark.
As mentioned above, a number of financial statement line items related to
cash and cash equivalents, loans, interest costs and dividends of the company
are included in the scope of the Group audit and were audited to a lower
capped materiality. However, we determined that the company did not
require a full scope audit of its complete financial information for the purposes
of the Group audit.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was
between £5,000,000 and £7,600,000. Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures,
for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £7,200,000 (2022: £5,625,000) for the group financial statements
and £11,700,000 (2022: £11,250,000) for the company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls –
and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £480,000 (group audit) (2022: £375,000) and £780,000 (company audit)
(2022: £750,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern basis of accounting included:
• We obtained from management their latest assessments supporting their conclusions with respect to the going concern basis of preparation of the financial statements;
• We evaluated the historical accuracy of the budgeting process to assess the reliability of the data;
• We evaluated management’s base case forecast and downside scenarios, and challenged the adequacy and appropriateness of the underlying assumptions;
• In conjunction with the above we have also reviewed management’s analysis of both liquidity, including the Group’s available financing and maturity profile, and covenant
compliance to satisfy ourselves that no breaches are anticipated over the period of assessment;
• We reviewed management accounts for the financial period to date and checked that these were consistent with the starting point of management’s forecasts, and supported
the key assumptions included in the assessment; and
• We have reviewed the disclosures made in respect of going concern included in the financial statements.
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Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the
group’s and the company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and the company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’
statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other
information, which includes reporting based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement,
we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Report of the Directors for the year ended 30 April 2023 is consistent
with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify any material misstatements in the
Strategic report and Report of the Directors.
Directors’ Remuneration
In our opinion, the part of the Directors Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
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Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s
compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed
or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification
of any material uncertainties to the group’s and company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period
of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and company was substantially less in scope than an audit and only consisted of making inquiries and
considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements and our knowledge and understanding of the group and company and their environment obtained in the course of the
audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with
the financial statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to
assess the group’s and company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the financial statements, the directors are responsible for the preparation of the financial statements in
accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic
alternative but to do so.
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Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to direct laws and regulations, for example
corporation tax legislation and the Companies Act 2006, and we considered the extent to which non-compliance might have a material effect on the financial statements. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were
related to posting inappropriate journal entries to manipulate revenue and financial performance and management bias included within accounting judgements and estimates. The group
engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures
performed by the group engagement team and/or component auditors included:
• Review of board minutes, discussions with management, internal audit and the Group’s legal function, including consideration of known or suspected instances of non-compliance with
laws and regulations and fraud;
• Evaluation of management’s controls designed to prevent and detect fraudulent financial reporting;
• Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations including to revenue;
• Assessing management’s significant judgements and estimates in particular to those relating to the determination of depreciation rates for vehicles held for hire and claims due from
insurance companies and self-insuring organisations; and
• Reviewing financial statement disclosures and testing to supporting documentation, where appropriate, to assess compliance with applicable laws and regulations.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use
audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
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Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Directors Remuneration Report to be audited are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the directors on 17 June 2015 to audit the financial statements for the year ended 30 April 2016 and subsequent
financial periods. The period of total uninterrupted engagement is 8 years, covering the years ended 30 April 2016 to 30 April 2023.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the ESEF-prepared annual financial report filed on
the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over
whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.
Jonathan Greenaway (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Newcastle upon Tyne
5 July 2023
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Consolidated income statement
For the year ended 30 April 2023
Note(s)
2023
£000
2022
£000
Restated
Revenue: hire of vehicles 5 61 0 , 5 0 2 56 3,28 8
Revenue: sale of vehicles 5 15 2 , 8 94 1 4 9, 9 3 9
Revenue: claims and services 5 72 6,3 50 530 ,330
Total revenue 5
Cost of sales (1, 0 5 4 ,1 7 3 ) ( 8 9 7, 3 4 9 )
Gross profit 43 5,57 3 346,2 08
Administrative expenses (excluding exceptional items) (2 13, 6 5 8 ) (1 93,727 )
Net impairment of trade receivables 6 (8,90 2 ) (8 ,2 5 5 )
Exceptional administrative expenses: impairment of goodwill 12, 28 (5 , 0 0 9 ) –
Exceptional administrative expenses: impairment of other intangibles 13, 28 (8, 4 8 2 ) –
Exceptional administrative expenses: reversal of previous impairment of property, plant and equipment 14, 28 – 2 ,99 8
Exceptional administrative expenses: other costs 28 – (69 0 )
Total administrative expenses (2 3 6 , 0 5 1 ) (1 9 9, 6 74 )
Operating profit 6 19 9, 5 2 2 14 6 , 5 3 4
Share of net profit of associates accounted for using the equity method 15 2 ,520 3, 866
Gain on bargain purchase 4, 28 – 355
EBIT 5 2 02 ,042 15 0 , 75 5
Finance income 90 34
Finance costs 8 (2 3 ,4 0 5 )
(18,100 )
Profit before taxation 1 78,727 1 32,689
Taxation 9 (3 9, 4 8 9 ) (3 1,14 4 )
Profit for the year 1 39 ,238 1 01, 5 4 5
Profit for the year is wholly attributable to owners of the Parent Company. All results arise from continuing operations.
Earnings per share
Basic 11 60.3 p 41. 3 p
Diluted 11 5 8 .7 p 40. 4 p
Throughout this report we refer to underlying results in order to allow management and other stakeholders to better compare the performance of the Group between years. Further details of
the prior year restatement are included within Note 2. For a reconciliation of underlying to reported results see pages 38 to 39.
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Consolidated statement of comprehensive income
For the year ended 30 April 2023
Note
2023
£000
2022
£000
Amounts attributable to the owners of the Parent Company
Profit attributable to the owners 1 39 ,238 1 01, 5 4 5
Other comprehensive income (expense)
Foreign exchange differences on retranslation of net assets of subsidiary undertakings 23, 689 (16 , 3 4 7 )
Net foreign exchange differences on long term borrowings held as hedges (1 7, 7 4 1 ) 11, 9 0 4
Foreign exchange difference on revaluation reserve 27 54 (4 1 )
Total other comprehensive income (expense) 6,0 0 2 (4 , 484 )
Total comprehensive income for the year 14 5 , 2 4 0 9 7, 0 61
All items will subsequently be reclassified to the consolidated income statement.
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Note
2023
£000
2022
£000
Non-current assets
Goodwill 12 113 , 8 7 3 114 , 9 2 6
Other intangible assets 13 1 2 7, 8 2 8 151, 312
Property, plant and equipment 14 1, 3 3 2 ,9 2 3 1,161, 91 5
Deferred tax assets 23 2 , 0 61 3 ,17 5
Interest in associates 15 5,207 5,8 4 3
Total non-current assets 1, 5 81, 8 9 2
Current assets
Inventories 16 54, 5 37 18 , 696
Receivables and contract assets 17 4 41, 2 7 7 359 , 053
Current tax assets 14 ,9 51 7, 4 3 2
Cash and bank balances 14 ,12 2 2 4 , 5 61
Total current assets 52 4,8 87
Total assets 2 ,1 0 6 , 7 7 9 1, 8 4 6 , 913
Current liabilities
Trade and other payables 18 3 4 4 , 8 67 246, 8 3 3
Provisions 19 822 –
Current tax liabilities 20 3, 327
Lease liabilities 21 49 ,493 52 ,524
Borrowings 18 14 , 0 79 2 1, 0 0 7
Total current liabilities 4 0 9, 2 8 1 323,6 9 1
Net current assets 11 5 , 6 0 6 8 6 , 0 51
Non-current liabilities
Trade and other payables 18
Provisions 19 6,60 9
Lease liabilities 21 107,272
Borrowings 20 5 37, 71 2
Deferred tax liabilities 23 51, 31 0
Total non-current liabilities 7 0 2 ,9 0 3 5 76 , 4 6 1
Total liabilities 1,112 ,18 4 9 0 0 ,15 2
Consolidated balance sheet
As at 30 April 2023
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Note
2023
£000
2022
£000
Net assets 994 , 595 94 6 , 761
Equity
Share capital 24 12 3 , 0 4 6 12 3 , 0 4 6
Share premium account 25 11 3 , 5 1 0 11 3 , 5 1 0
Treasury shares reserve 26 (6 0 , 4 2 0 ) ( 7, 4 9 3 )
Own shares reserve 26 (9, 61 5 ) (16,439 )
Translation reserve 27 (2 , 68 5 ) (8, 63 3 )
Other reserves 27 33 0,4 89 33 0,4 3 5
Retained earnings
At 1 May 412 , 3 3 5
Profit for the financial year 1 39 ,238 1 01, 5 4 5
Other changes in retained earnings (5 1, 3 0 3 ) (4 0 ,95 7 )
At 30 April 50 0, 270 412 , 3 3 5
Total equity 994, 595 94 6 , 761
Total equity is wholly attributable to the owners of the Parent Company (Company number 00053171). The financial statements on pages 139 to 194 were approved by the Board of Directors
and authorised for issue on 5 July 2023.
They were signed on its behalf by:
Philip Vincent
Chief Financial Officer
Consolidated balance sheet continued
As at 30 April 2023
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Note
2023
£000
2022
£000
Net cash generated from operations (a) 84,322 1 2 7, 6 4 3
Investing activities
Interest received 90 34
Distributions from associates 15 3 ,1 5 6 4, 070
Payment for acquisition of subsidiary, net of cash acquired 4 (10 , 0 0 4 ) (4 8 2 )
Proceeds from disposal of other property, plant and equipment 678 2,68 3
Purchases of other property, plant and equipment (7, 3 6 2 ) (5 2 , 3 69 )
Purchases of intangible assets (1, 76 5 ) (1, 37 3 )
Net cash used in investing activities (15 , 2 0 7 ) (4 7, 4 3 7 )
Financing activities
Dividends paid (5 2,220 ) (4 3 , 8 97 )
Receipt of bank loans and other borrowings 96, 8 07 3 1 8,056
Repayments of bank loans and other borrowings
(277,617 )
Debt issue costs paid (95 0 ) (5,428 )
Exceptional finance costs – (1, 4 3 5 )
Principal element of lease payments (6 5 , 11 0 ) (43,659 )
Payments to acquire treasury shares (5 2 ,9 2 7 ) ( 7, 4 9 3 )
Proceeds from sale of own shares 1, 414 –
Payments to acquire own shares for share schemes
(9,933 )
Net cash used in financing activities (7 2 ,9 8 6 ) (7 1, 4 0 6 )
Net (decrease) increase in cash and cash equivalents (3 , 8 7 1 ) 8, 80 0
Cash and cash equivalents at 1 May 15 , 769 6 , 8 21
Effect of foreign exchange movements (2 17 ) 14 8
Cash and cash equivalents at 30 April (b) 11, 6 8 1 15 , 76 9
Consolidated cash flow statement
For the year ended 30 April 2023
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(a) Net cash generated from operations
2023
£000
2022
£000
Operating profit 19 9, 5 2 2 14 6 , 5 3 4
Adjustments for:
Depreciation of property, plant and equipment 17 5 , 0 6 6 1 9 7, 1 6 2
Net reversal of previous impairment of property, plant and equipment – (2 ,99 8 )
Net impairment of goodwill 5,0 09 –
Net impairment of other intangibles 8,482 –
Amortisation of intangible assets 21, 4 0 8 2 0 , 7 71
Loss on disposal of other property, plant and equipment 218 5 81
Loss on disposal of intangible assets – 34
Share options fair value charge 4,6 47 3,69 5
Operating cash flows before movements in working capital 414 , 3 5 2 365, 779
Decrease (increase) in non-vehicle inventories 273 (1,16 9 )
Increase in receivables (81, 981 ) (5 4 ,4 0 0 )
Increase in payables 71,810 2 2,253
Increase in provisions 7, 4 3 1 –
Cash generated from operations
Income taxes paid, net (3 6, 6 4 0 ) ( 2 7, 3 8 2 )
Interest paid (2 1,15 0 ) (13 , 2 75 )
Net cash generated from operations before purchases of and proceeds from disposal of vehicles for hire 35 4 ,0 95 2 91, 8 0 6
Purchases of vehicles for hire (3 9 8 ,1 8 7 ) (2 9 2 ,93 5 )
Proceeds from disposals of vehicles for hire 12 8 , 414 12 8 , 7 7 2
Net cash generated from operations 84,322 12 7, 6 4 3
Cash outflows for additions and proceeds from disposal in relation to vehicles for hire are recognised within operating cashflows. Cash outflows for additions and proceeds from disposal in
relation to other property, plant and equipment are recognised as investing activities.
(b) Cash and cash equivalents
2023
£000
2022
£000
Cash and cash equivalents comprise:
Cash and bank balances 14 ,12 2 2 4 , 5 61
Bank overdrafts (2 , 4 4 1 ) (8, 792 )
Cash and cash equivalents 11, 6 8 1 15 , 76 9
Cash and bank balances are stated gross of arrangements that exist with lenders to pool accounts and offset balances.
Notes to the consolidated cash flow statement
For the year ended 30 April 2023
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Share capital
and share
premium
1
£000
Treasury shares
reserve
2
£000
Own shares
reserve
2
£000
Translation
reserve
3
£000
Other
reserves
3
£000
Retained
earnings
£000
Total
£000
Total equity at 1 May 2021 236,556 – (6 , 4 6 0 ) (4 ,19 0 ) 3 3 0 , 4 76 3 5 1 , 74 7 9 0 8 .12 9
Share options fair value charge – – – – – 3,69 5 3,69 5
Share options exercised – – – – – (5 8 8 ) (5 8 8 )
Dividends paid – – – – – (4 3 , 8 97 ) (4 3 , 8 97 )
Net purchase of shares – ( 7, 4 9 3 ) (10 , 5 6 7 ) – – – (18,060 )
Transfer of shares on vesting of share options – – 58 8 – – – 588
Deferred tax on share based payments recognised in equity – – – – – (16 7 ) (16 7 )
Total comprehensive income (expense) – – – (4, 4 4 3 ) (41 ) 1 01, 5 4 5 9 7, 0 61
Total equity at 30 April 2022 and 1 May 2022 236,5 56 ( 7, 4 9 3 ) (1 6,439 ) (8,6 3 3 ) 33 0,4 35 412 , 3 3 5 9 4 6 , 761
Share options fair value charge – – – – – 4 , 6 47 4 ,6 47
Share options exercised – – – – – (5 , 41 0 ) (5 , 410 )
Dividends paid – – – – – (5 2, 2 2 0 ) (52, 2 2 0 )
Net purchase of shares – (52,9 27 ) 1, 414 – – – (51,513 )
Transfer of shares on vesting of share options – – 5, 410 – – – 5 , 410
Deferred tax on share based payments recognised in equity – – – – – 1, 6 8 0 1, 6 8 0
Total comprehensive income – – – 5 , 94 8 54 13 9, 2 3 8 14 5 , 2 4 0
Total equity at 30 April 2023 23 6,5 56 (6 0 , 4 2 0 ) (9, 615 ) (2 , 6 8 5 ) 33 0,4 89 50 0, 270 994 , 595
1 Further details can be found within Note 24 and 25.
2 Further details can be found within Note 26.
3 Other reserves comprise the other reserve, capital redemption reserve, revaluation reserve and merger reserve, further details on Translation reserve and Other reserves can be found within Note 27.
Consolidated statement of changes in equity
For the year ended 30 April 2023
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Notes to the consolidated financial statements continued
2 Principal accounting policies continued
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2 Principal accounting policies continued
Revenue recognition continued
Claims and services continued
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2 Principal accounting policies continued
Financial instruments and hedge accounting continued
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2 Principal accounting policies continued
Leased assets continued
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3 Critical accounting judgements and key sources of estimation uncertainty continued
Contract assets – claims due from insurance companies and self-insuring organisations continued
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5 Segmental reporting continued
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5 Segmental reporting continued
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9 Taxation continued
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12 Goodwill continued
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13 Other intangible assets continued
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14 Property, plant and equipment continued
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20 Borrowings continued
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20 Borrowings continued
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21 Leases continued
As lessee continued
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27 Translation reserve and other reserves continued
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28 Exceptional items continued
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29 Share based payments continued
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30 Financial instruments continued
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30 Financial instruments continued
Credit risk management continued
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33 Investments continued
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Note
2023
£000
2022
£000
Non-current assets
Investments 5 4 47,93 0 445,600
Deferred tax assets 6 3,749 1,589
Total non-current assets 451,679 4 47,18 9
Current assets
Receivables and contract assets 7 1,112 ,0 41 1,054,052
Cash and bank balances 2,160 35
Total current assets 1,114,2 01 1,054,087
Total assets 1,565,880 1,501,276
Current liabilities
Trade and other payables 8 338,786 369,0 91
Short term borrowings 9 – 8,265
Total current liabilities 338,786 37 7, 3 5 6
Net current assets 775,415 676,731
Non-current liabilities
Long term borrowings 9 5 37,712 421,822
Total non-current liabilities 5 37,712 421,822
Total liabilities 876,498 799,178
Net assets 689,382 702,098
Equity
Share capital 10 123,046 123,046
Share premium account 11 113, 510 113,510
Treasury shares reserve 12 (60,420) ( 7,4 9 3)
Other reserves 13 325,030 325,030
Retained earnings
At 1 May 148,005 141,185
Profit for the financial year 86,104 47,18 9
Other changes in retained earnings (45,893) (40,369)
At 30 April 188,216 148,005
Total equity 689,3 82 702,098
The Company balance sheet and accompanying notes on pages 195 to 206 were approved by the Board of Directors and authorised for issue on 5 July 2023.
They were signed on its behalf by:
Philip Vincent
Chief Financial Officer
Company balance sheet
As at 30 April 2023
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Share capital
and share
premium
1
£000
Treasury shares
reserve
2
£000
Other
reserves
3
£000
Retained
earnings
£000
Total
£000
Total equity at 1 May 2021 236,556 – 325,030 141,185 702,771
Share options fair value charge – – – 3,695 3,695
Net purchase of shares – (7, 4 93 ) – – (7, 4 93 )
Dividends paid – – – (43,897) (43,897)
Deferred tax on share based payments recognised in equity – – – (167) (167)
Total comprehensive income – – – 47,18 9 47,18 9
Total equity at 30 April 2022 and 1 May 2022 236,556 (7, 493 ) 325,030 148,005 702,098
Share options fair value charge – – – 4,647 4,647
Net purchase of shares – (52,927) – – (52,927)
Dividends paid – – – (52,220) (52,220)
Deferred tax on share based payments recognised in equity – – – 1,680 1,680
Total comprehensive income – – – 86,104 86,104
Total equity at 30 April 2023 236,556 (60,420) 325,030 188,216 689,382
1 Further details can be found within Note 10 and 11.
2 Further details can be found within Note 12.
3 Other reserves comprise the other reserve, capital redemption reserve, revaluation reserve and merger reserve, further details on Other reserves can be found within Note 13.
Company statement of changes in equity
For the year ended 30 April 2023
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1 General information
Basis of preparation
The Redde Northgate plc Company balance sheet, Statement of changes in equity and related notes have been prepared in accordance with the Companies Act 2006 applicable to
companies using FRS 101 Reduced Disclosure Framework, which applies the recognition and measurement bases of IFRS with reduced disclosure requirements. In the prior year the Company
balance sheet and Statement of changes in equity were prepared under UK-adopted International Accounting Standards and no differences have been noted in the recognition and
measurement of profit or net assets upon transition to FRS 101. The financial information has been prepared on an historical cost basis. The financial statements have been prepared on
a going concern basis. The functional currency of the Company and the presentation currency adopted is UK Sterling.
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with FRS 101:
• Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted-average exercise prices of share options and how the fair value of goods or services
received was determined)
• IFRS 7, ‘Financial Instruments: Disclosures’
• Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for fair value measurement of assets and liabilities)
• Paragraph 38 of IAS 1, ‘Presentation of financial statements’ comparative information requirements in respect of:
i. paragraph 79(a)(iv) of IAS 1, ‘Presentation of financial statements’
ii. paragraph 73(e) of IAS 16, ‘Property, plant, and equipment’
iii. paragraph 118(e) of IAS 38, Intangible assets (reconciliations between the carrying amount at the beginning and end of the period)
• The following paragraphs of IAS 1, ‘Presentation of financial statements’:
i. 10(d), (statement of cash flows)
ii. 10(f) (a statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement
of items in its financial statements, or when it reclassifies items in its financial statements)
iii. 16 (statement of compliance with all IFRS)
iv. 38A (requirement for minimum of two primary statements, including cash flow statements)
v. 38B-D (additional comparative information)
vi. 40A-D (requirements for a third statement of financial position)
vii. 111 (cash flow statement information), and
viii. 134-136 (capital management disclosures)
• IAS 7, ‘Statement of cash flows’
• Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the disclosure of information when an entity has not applied a new IFRS
that has been issued but is not yet effective)
• Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation)
• The requirements in IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into between two or more members of a group. All of the Parent Company’s
inter-company transactions and balances are with wholly-owned subsidiaries of the Group.
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the Parent Company is not presented as part of these financial statements. The profit after tax for the
year of the Parent Company amounted to £86,104,000 (2022: £47,189,000).
Notes to the Company financial statements
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2 Principal accounting policies of the Company
A summary of the principal accounting policies is set out below. These accounting policies have been applied consistently.
Currency translation
The Company’s functional currency is UK Sterling. Transactions in currencies other than the functional currency are translated at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities, including amounts due from or to subsidiaries, denominated in currencies other than the functional currency (being UK Sterling) are retranslated at year end
exchange rates. Gains and losses on retranslation are included in net profit or loss for the year.
Revenue recognition
Dividends proposed by subsidiaries are recognised as income by the Company when they represent a present obligation of the subsidiaries, in the period in which they are formally approved
for payment.
Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that asset’s net carrying amount.
Dividends payable
Dividends proposed are recognised when they represent a present obligation, in the period in which they are formally approved for payment. Accordingly, an interim dividend is recognised
when paid and a final dividend is recognised when approved by the Board of Directors.
Investments in subsidiaries
Investments in subsidiaries represent equity holdings in subsidiaries and long term amounts owed by subsidiaries. Such investments are valued at cost less any impairment provisions.
Investments relating to equity holdings in subsidiaries are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable;
the recoverable amount of the investment is the higher of fair value less costs of disposal and value in use. Investments relating to long term amounts owed by subsidiaries are reviewed
to assess if a material expected credit loss provision is required in respect of these balances.
Liquid investments and cash and cash equivalents
Liquid investments represent highly liquid current asset investments such as term deposits and managed funds invested in high quality fixed income instruments. They do not meet the IAS 7
definition of cash and cash equivalents, normally because even if readily accessible, the underlying investments have an average maturity profile greater than 90 days from the date first
entered into, or because they are held primarily for investment purposes rather than meeting short term cash commitments.
Cash and cash equivalents comprise cash on hand, deposits held on call with banks, highly liquid investments that are readily convertible into known amounts of cash, and which are subject
to insignificant risk of changes in value and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes. The cash balance is presented net
of bank overdrafts which are repayable on demand. Cash and cash equivalents have a maturity period of 90 days or less.
Borrowings
Interest-bearing loans and bank overdrafts are initially recorded at the proceeds received, net of direct issue costs. They are subsequently measured at amortised cost using the effective
interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial
liability, or, where appropriate, a shorter period. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis
using the effective interest rate method.
Notes to the Company financial statements continued
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2 Principal accounting policies of the Company continued
Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Treasury shares
The Company makes open market purchases of its own shares in order to fund future investment. When shares recognised as equity are repurchased, the amount of the consideration paid,
which includes directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve.
The acquired shares are initially recognised at historical cost and then at each reporting date, adjustments are made to write down the carrying value of own shares when, in the opinion
of the Directors, there is a significant market value reduction.
When treasury shares are sold, reissued, or transferred to the own shares reserve subsequently, the amount received is recognised as an increase in equity and the resulting proceeds on the
transaction are presented within the consolidated income statement. Should the amount received exceed the purchase price paid by the Company, the excess is transferred to the Company’s
share premium account.
Own shares
The Company makes open market purchases of its own shares in order to satisfy the requirements of the Company’s existing share schemes. Own shares are recognised at cost as a reduction
in shareholder equity. The carrying values of own shares are compared with their market values at each reporting date and adjustments are made to write down the carrying value of own
shares when, in the opinion of the Directors, there is a significant market value reduction.
Employee share schemes and share based payments
The Company issues equity settled awards to certain employees.
Equity settled employee schemes, including employee share options and deferred annual bonuses, provide employees with the option to acquire shares of the Company. Employee share
options and deferred annual bonuses are generally subject to performance or service conditions.
The fair value of equity settled payments is measured at the date of grant and charged to the income statement over the period during which performance or service conditions are required
to be met or immediately where no performance or service criteria exist. The fair value of equity settled payments granted is measured using the Black–Scholes or the Monte Carlo model.
At the end of each reporting period, the Company revises its estimate of the number of options that are expected to vest based on the non-market vesting conditions and service conditions.
It recognises the impact of the revision to the original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The Company also operates a share incentive plan under which employees each have the option to purchase an amount of shares annually and receive an equivalent number of free shares.
The Company recognises the free shares as an expense evenly throughout the period over which the employees must remain in employment of the Company in order to receive the free shares.
The Company operates a share save scheme under which employees have the option to convert savings to shares at an agreed exercise price. The Company recognises the option value
evenly over the savings period.
Notes to the Company financial statements continued
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3 Significant accounting estimates and judgements
The Directors do not consider there to be critical accounting judgements or key sources of estimation uncertainty which could have a significant risk of causing a material adjustment to the
carrying amounts of the Company’s assets and liabilities within the next financial year. We have set out below the most significant judgements and estimates applied in the preparation of the
Company’s balance sheet.
The most significant accounting judgement is whether there are impairment indicators in respect of the carrying value of the Company’s investments in subsidiaries and amounts due from
subsidiary undertakings.
The most significant accounting estimate is whether a credit loss provision is required in respect of any of the Company’s receivable balances. Over 99% of the receivable balances relate to
intercompany balances, primarily with Group holding companies which hold the Company’s investments in the operating companies. There is not considered to be any significant risk of a
relevant overstatement of these carrying values. In assessing this, the Company has considered the cash and operating assets held by the relevant Group companies and the level of earnings
generated by the Group’s operations.
4 Staff costs
The average monthly number of employees was 41 (2022: 32), engaged in management and administrative activities.
2023
£000
2022
£000
Wages and salaries 4,452 5,346
Social security 1,273 984
Pensions 336 373
Share based payments 2,365 1,641
Staff costs 8,426 8,344
The above employee figures include Directors who receive Directors’ fees from Redde Northgate plc. Details of fees payable to Directors are set out in the Remuneration Report.
Shared payments expense
The Group’s and Company’s various share incentive plans are explained in the Remuneration Report on pages 98 to 124 and in Note 29 of the Notes to the Groups financial statements.
All options granted under the DABP, MPSP, EPSP and EAB are nil cost options. Options granted under the SAYE Scheme have exercise prices ranging from £2.12 to £2.69.
The All Employee Share Scheme (AESS) has a 12 month accumulation period. Partnership shares are purchased by the employee at the end of the accumulation period from the amount
contributed by the employee during that period. The Company allocates an amount of free matching shares equivalent to the number of partnership shares purchased. The vesting period
for matching shares is three years.
Matching shares are forfeited if the employee either sells the related partnership shares or leaves the Company before the three years have lapsed.
The Board may make discretionary awards of free shares to eligible employees. Employees must remain in employment of the Company during the vesting period of three years in order
to receive the free shares.
The SAYE Scheme has a three year savings period where employees save at an agreed rate. At the end of the savings period, employees can choose to either exercise options or withdraw
their savings.
Notes to the Company financial statements continued
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5 Investments
Investment in
subsidiary
undertakings
£000
Cost and carrying amount:
At 1 May 2021 443,546
Capital contribution 2,054
At 30 April 2022 and 1 May 2022 445,600
Capital contribution 2,330
At 30 April 2023 4 47,93 0
Subsidiary holdings, included in the Group financial statements for the year ended 30 April 2023, are shown in Note 33 of the Group financial statements. All of these subsidiary holdings are
wholly-owned, unless otherwise indicated in Note 33 of the Group financial statements. All operating subsidiaries’ results are included in the Group financial statements.
6 Deferred tax assets
The following are the major deferred tax assets recognised by the Company and movements thereon during the current and prior year:
Share
based
payments
£000
Other
temporary
differences
£000
Total
£000
At 1 May 2021 1,017 51 1,068
Credit/(charge) to income 713 (25) 688
Charge to equity (167) – (167)
At 30 April 2022 and 1 May 2022 1,563 26 1,589
Credit to income 348 132 480
Credit to equity 1,68 0 – 1,680
At 30 April 2023 3,591 158 3,749
Notes to the Company financial statements continued
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7 Receivables and contract assets
2023
£000
2022
£000
Amounts due from subsidiary undertakings 1,111,517 1,053,582
Other taxes – 114
Other receivables and prepayments 524 356
1,112,0 41 1,054,052
Amounts due from subsidiary undertakings are non-interest bearing and repayable on demand, the Company does not intend to call upon these amounts due in the 12 months following
the date of issuance of the annual report.
8 Trade and other payables
2023
£000
2022
£000
Trade payables 120 55
Amounts due to subsidiary undertakings 330,558 362,308
Social security and other taxes 240 215
Accruals and deferred income 7,8 68 6,513
338,786 369,091
The Directors consider that the carrying amount of trade and other payables approximates to their fair value due to their short term nature.
Amounts due to subsidiary undertakings includes £196,628,000 (2022: £221,230,000) non-interest bearing and repayable on demand, a term loan repayable in June 2023 of £133,930,000
(2022: £131,009,000) which bears interest at 1.95% above SONIA (2022: 1.95%) and £nil balance (2022: £10,069,000) on a loan repayable in April 2025 which bears interest at a fixed rate of 3.25%.
Notes to the Company financial statements continued
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9 Borrowings
The Directors consider that the carrying amounts of the Company’s borrowings approximate to their fair value.
2023
£000
2022
£000
Bank loans and overdrafts 20 7,3 58 115, 3 23
Loan notes 329,854 314,264
Cumulative preference shares 500 500
537, 712 430,087
The borrowings are repayable as follows:
2023
£000
2022
£000
On demand or within one year (shown within current liabilities)
Bank loans and overdrafts – 8,265
– 8,265
In the second year
Bank loans – –
Loan notes – –
– –
In the third to fifth years
Bank loans 213,818 114 , 56 3
Loan notes 132,075 –
345,893 114 ,5 6 3
Due after more than five years
Loan notes 198,113 314,655
Cumulative preference shares 500 500
198,613 315,155
Unamortised finance fees relating to the bank loans and loan notes (6,794) (7, 896)
Total borrowings 537, 712 430,087
Less: Amounts due for settlement within one year (shown within current liabilities) – 8,265
Amounts due for settlement after more than one year 537, 712 421,822
Notes to the Company financial statements continued
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9 Borrowings continued
Loan notes
The Company has £330,188,000 (2022: £314,264,000) of loan notes which bear interest at a blended rate of 1.3% (2022: 1.3%). These are unsecured and are repayable in November 2027,
November 2029 and November 2031.
Cumulative preference shares
The cumulative preference shares of 50p each entitle the holder to receive a cumulative preferential dividend at the rate of 5% on the paid up capital and the right to a return of capital
at either winding up or a repayment of capital. The cumulative Preference shares do not entitle the holders to any further or other participation in the profits or assets of the Company.
These shares have no voting rights other than in exceptional circumstances.
The total number of authorised cumulative Preference shares of 50p each is 1,300,000 (2022: 1,300,000), of which 1,000,000 (2022: 1,000,000) were allotted and fully paid at the balance sheet date.
Bank loans and overdrafts
Bank loans and overdrafts are unsecured and bear interest at rates of 0.95% to 1.95% (2022: 0.90% to 1.95%) above the relevant interest rate index, being SONIA for Sterling denominated debt
and EURIBOR for Euro denominated debt, subject to a floor of 0%. Bank loans and overdraft facilities mature in November 2026.
10 Share capital
Number of
shares £000
At 1 May 2021, 30 April 2022 and at 30 April 2023 246,091,423 123,046
The Company has one class of ordinary shares with a par value of 50p.
11 Share premium account
£000
At 1 May 2021, 30 April 2022 and at 30 April 2023 113,510
Notes to the Company financial statements continued
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12 Treasury shares reserve
Movements on the treasury shares reserve and own shares reserve are shown in the Statement of changes in equity, which can be seen on page 196. Further information on these reserves
is given below:
Treasury shares reserve
The reserve for the Company’s treasury shares comprises the cost of the Company’s shares held by the Company. At 30 April 2023, the Company held 16,577,571 of the Company’s shares
(2022: 1,825,991). The total number of shares held in treasury represents 7% (2022: 0.7%) of the allotted and fully paid share capital of the Company.
13 Other reserves
Capital
redemption
reserve
£000
Revaluation
reserve
£000
Merger
reserve
£000
Other
reserve
£000
Total Other
reserve
£000
At 1 May 2021, 30 April 2022 and at 30 April 2023 40 – 63,159 261,831 325,030
The above shows the movements on the reserves classified as “Other reserves” on the Company’s Statement of changes in equity. Movements on the translation reserve are shown in the
Statement of changes in equity, which can be seen on page 196. Further information on certain of these reserves is given below:
Merger reserve
The merger reserve in the Company and Group arose from acquisitions in previous years.
Other reserve
In the year ended 30 April 2020, the consideration for the acquisition of Redde plc was settled though the issue of 112,858,905 ordinary shares of the Company. Holders of Redde plc shares
received 0.3669 shares in the Company for each Redde plc share held by them. 112,858,197 shares were issued to holders of Redde plc shares, and where there were fractions of shares that
could not be allocated to the holders of Redde plc shares, the total of these fractions of shares was sold in the market. The number of these shares was 708. The other reserve represents the
excess of the share price on 21 February, 282p over the nominal share price of 50p. The share premium represents the excess of the share price of 251p at the time of the sale of these shares
over the nominal share price of 50p. The Company has recorded the premium for the issue of shares for the acquisition of Redde in other reserves in accordance with Section 612 of the
Companies Act 2006 in respect of merger relief.
Notes to the Company financial statements continued
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14 Related party transactions
Transactions with subsidiary undertakings
Transactions between the Company and its subsidiary undertakings, which are related parties, are £6,173,000 (2022: £2,703,000) interest payable, £6,974,000 (2022: £1,303,000) interest receivable
and £9,284,000 (2022: £8,151,000) royalty charges receivable.
Balances with subsidiary undertakings at the balance sheet date are shown in Notes 7 and 8.
Transactions with other related parties
There were no transactions with other related parties in the current or prior years.
Remuneration of key management personnel
In the current and prior year, the Directors of the Company are determined to be the key management personnel of the Company. There are other senior executives in the Company who are
able to influence the Company in the achievement of its goals. However, in the opinion of the Directors, only the Directors of the Company have significant authority for planning, directing
and controlling the activities of the Company.
In respect of the compensation of key management personnel, the short term employee benefits, post employment (pension) benefits, termination benefits and details of share options
granted are set out in the Remuneration report on pages 98 to 124.
The fair value charged to the income statement in respect of equity settled share based payment transactions with the Directors is £1,799,000 (2022: £672,000). There are no other long term
benefits accruing to key management personnel, other than as set out in the Remuneration report.
Notes to the Company financial statements continued
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Glossary
Term Definition
AEDIVE A trade association in Spain representing companies engaged
in vehicle rental, leasing and fleet management
AGM Annual general meeting of the Company
Annual report on
remuneration
That section of the Remuneration report which is subject to an
advisory shareholder vote
Average capital
employed
A two point average of capital employed at last day of the current
and previous financial years
Auxillis A business within the Redde operating segment providing fault and
non-fault accident management assistance and related services
B2C Business to consumer
Blakedale A business within the Northgate UK&I operating segment providing
specialist traffic management services
BVRLA A UK trade association representing companies engaged in vehicle
rental, leasing and fleet management
Capex Capital expenditure
Capital employed Net assets excluding net debt of £694.4m (2022: £582.5m), goodwill
of £113.9m (2022: £114.9m), acquired intangible assets of £124.1m
(2022: £147.8m) and the cumulative impact of certain adjustments
to depeciation of £46.5m (2022: nil)
Car parc Refers to the number of cars and other vehicles registered for use
in a particular country
CDP An organisation running a global disclosure system for investors,
companies and other organisations
CEO Chief Executive Officer
CFO Chief Financial Officer
ChargedEV A business within the Northgate UK&I operating segment providing
EV charging and solar infrastruture and solutions
Contract hire IFRS 16 (leases) relating to vehicles where the funder retains the
residual value risk
DABP Deferred Annual Bonus Plan, a senior management share award
scheme
Term Definition
DfT Department for Transport, a UK Government department
Disposal profit(s) This is a non-GAAP measure used to describe the adjustment in
the depreciation charge made in the year for vehicles sold at
an amount different to their net book value at the date of sale
(net of attributable selling costs)
Drive to Zero A Group project related to the Group’s targets to reduce emissions
e-LCV Electric LCV
EAB Executive Annual Bonus scheme, a senior management share
award scheme
eAuction The part of the Group which generates vehicles sales revenue
through the Group’s online sales platforms
EBIT Earnings before interest and taxation. Underlying unless otherwise
stated
EBITDA Earnings before interest, taxation, depreciation and amortisation
EPS Basic earnings per share. Underlying unless otherwise stated
EPSP Executive Performance Share Plan, a senior management share
award scheme
ESG Environmental, social and governance
EV(s) Electric vehicle(s)
Facility headroom Calculated as facilities of £834m less net borrowings of £544m.
Net borrowings represent net debt of £694m excluding lease
liabilities of £157m and unamortised arrangement fees of £7m and
are stated after the deduction of £12m of net cash and overdraft
balances which are available to offset against borrowings
FCA Financial Conduct Authority, a UK regulatory body
FMG A business within the Redde operating segment providing fleet
management services
FMG RS A business within the Redde operating Segment providing vehicle
repair services
FRC Financial Reporting Council, a UK regulatory body
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Glossary continued
Term Definition
Free cash flow Net cash generated after principal lease payments and before the
payment of dividends and payments to acquire treasury shares
(comparative updated)
FridgeXpress A business within the Northgate UK&I operating segment providing
specialist temperature-controlled vehicle services
FY2020 The year ended 30 April 2020
FY2021 The year ended 30 April 2021
FY2022 The year ended 30 April 2022
FY2023 The year ended 30 April 2023
FY2024 The year ending 30 April 2024
GAAP Generally Accepted Accounting Practice: meaning compliance
with IFRS
Gearing Calculated as net debt divided by net tangible assets
GHG Greenhouse gas
Growth capex Growth capex represents the cash consumed in order to grow the
total owned rental fleet or the cash generated if the fleet size is
reduced in periods of contraction
HMRC The UK tax authority
HP (leases) Leases recognised on the balance sheet that would previously have
been classified as finance leases prior to the adoption of IFRS 16
ICE vehicles Vehicles powered by an internal combustion engine
IEA The International Energy Agency providing data analysis and
solutions on all fuels and technologies
IFRS International Reporting Standards, as adopted in the UK
IFRS 16 (leases) Leases recognised on the balance sheet that would previously have
been classified as operating leases prior to the adoption of IFRS 16
IMI The professional association for individuals working in the UK
motor industry
Income from
associates
The Group’s share of net profit of associates accounted for using
the equity method
Term Definition
ISO 14001 An internationally agreed standard that sets out the requirements
for an environmental management system
KPIs Key performance indicators
LCV Light commercial vehicle: the official term used within the
European Union for a commercial carrier vehicle with a gross
vehicle weight of not more than 3.5 tonnes
Lease principal
payments
Includes the total principal payment on leases including those
recognised before and after adoption of IFRS 16
Listing Rules The Listing Rules of the FCA
LTIP Long term incentive plan, including the EPSP
MPSP Management Performance Share Plan, a senior management
share award scheme (closed to new awards from 2013)
Net replacement capex Net capital expenditure other than that defined as growth capex
Net zero As defined under The Paris Agreement, a legally binding
international treaty on climate change
NewLaw A business within the Redde operating segment providing legal
services
Net tangible assets Net assets less goodwill and other intangible assets
NGOs Non-government organisations
Non-GAAP A financial metric used which is not defined under GAAP
Non-ICE vehicles Vehicles not powered by an internal combustion engine
Northgate The part of the Group comprising the operating segments of
Northgate UK&I and Northgate Spain. Also the part of the Group
prior to the Acquisition of Redde plc
Northgate Spain The Northgate Spain operating segment located in Spain and
providing commercial vehicle hire and ancillary services
Northgate UK&I The Northgate UK&I operating segment representing the
commercial vehicle hire part of the Group located in the
United Kingdom and the Republic of Ireland
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Glossary continued
Term Definition
OEM(s) Original equipment manufacturer(s): a reference to our vehicle
suppliers
PBT Profit before taxation. Underlying unless otherwise stated
PPU Profit per unit/loss per unit – this is a non-GAAP measure used to
describe disposals profits (as defined), divided by the number
of vehicles sold
Profit & loss Referring to the consolidated income statement
PwC PricewaterhouseCoopers LLP
Q2 Referring to the second quarter (the fourth to sixth months) of the
financial year
Redde The Redde operating segment representing the insurance claims
and services part of the Group providing a range of mobility
solutions. Also the Redde plc company and its subsidiaries prior
to the Merger
Redde Northgate The Group
Rental margin Calculated as rental profit divided by revenue (excluding vehicle
sales)
Rental profit(s) EBIT excluding disposal profits
ROCE Underlying return on capital employed: calculated as underlying
EBIT (see GAAP reconciliation) divided by average capital
employed
Section 172 Referring to Section 172 of the Companies Act 2006
SAYE The Company’s all employee share saving scheme
SECR Streamlined Energy & Carbon Reporting
Term Definition
SIP The Company’s HMRC approved share incentive plan, including the
All Employee Share Scheme (AESS) and the YourShare programme
Spain Referring to the Northgate Spain operating segment
SMMT A UK trade association in the automotive sector
SONIA An interest rate benchmark reference rate for UK Sterling currency
Steady state cash
generation
Underlying EBITDA less net replacement capex and lease principal
payments
TCFD The Task Force on Climate-related Financial Disclosures
The Code The UK Corporate Governance Code
The Company Redde Northgate plc
The Group The Company and its subsidiaries
The Merger/the merger The acquisition by the Company of 100% of the share capital of
Redde plc on 21 February 2020
UKAS A UK government appointed accredidation body
UK&I Referring to the Northgate UK&I operating segment
Underlying free
cash flow
Free cash flow excluding growth capex
Utilisation Calculated as the average number of vehicles on hire divided
by average rentable fleet in any period
VOH Vehicles on hire. Average unless otherwise stated
WACC Weighted average cost of capital calculated using the capital
asset pricing model
ZEV Zero emissions vehicle
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Shareholder information
Classification
Information concerning day to day movements in the price of the Company’s ordinary shares
can be found on the Company’s website at: www.reddenorthgate.com
The Company’s listing symbol on the London Stock Exchange is REDD.
The Company’s joint corporate brokers are Barclays Bank plc and Numis Securities Limited
and the Company’s ordinary shares are traded on the Stock Exchange Trading system for
Money Market, (SETSmm).
The Company is registered in England and Wales.
Company number 00053171.
Financial calendar
December
Publication of interim statement
January
Payment of interim dividend
July
Announcement of year end results
Report and financial statements available to shareholders
September
Annual general meeting
Payment of final dividend
Secretary and registered office
James Kerton
Tel: 01325 467558
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: 0371 664 0391
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international rate.
Redde Northgate plc
Northgate Centre
Lingfield Way
Darlington
DL1 4PZ
Tel: 01325 467558
www.reddenorthgate.com
Redde Northgate plc
Northgate Centre
Lingfield Way
Darlington
DL1 4PZ
www.reddenorthgate.com
Redde Northgate plc Annual Report and Accounts 2023