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Preliminary announcement of results for the year ended 30 April 2022

6 July 2022

Strong margins and new business wins support 62% increase in underlying PBT

Redde Northgate (LSE:REDD), the leading integrated mobility solutions platform providing services across the
vehicle lifecycle, is pleased to announce its full year results for the year ended 30 April 2022.

Key financial highlights

• Group revenue including vehicle sales grew 12%, reflecting strong customer demand, recovery postCOVID in business volumes and traffic activity, and lower de-fleeting disposal activity
• Underlying revenue (excluding vehicle sales) grew 24%, due to increased customer activity across all business units supporting both volume growth and price improvements, plus new customer wins
• EBIT rose 80% through higher revenues and margin improvement, helped by underlying strength in rental margins, post-COVID-19 activity recovery, realisation of merger synergies and leaner cost base
• Underlying PBT up 62% to £151.3m supported by margin growth and disposal profits
• Steady state cash generation improved 54% to £216.4m; free cashflow lower, with an inflow of £12.3m (FY2021: £97.8m) due to incremental fleet investment to meet demand
• ROCE increased 4.4ppt to 13.9% due to higher profitability in the Group, strong disposal values and a leaner cost base
• Refinancing in Nov 2021: £792m of largely fixed-rate funding facilities and reduced cost of borrowing
• Group net debt, excluding IFRS 16 leases, increased to £452.1m; 1.4x net debt to EBITDA (FY2021: 1.5x) well within target leverage range of 1.0x to 2.0x
• Final dividend of 15.0p, bringing total dividend to 21.0p (FY2021: 15.4p) reflecting the Board’s confidence in Group outlook
• £30m share buyback programme underway since March, £20.6m purchased by 30 June 2022

Business highlights

• Progress on Group strategy roadmap delivering increased platform scale and full-service offering, enhancing appeal to a broadening blue-chip customer base
• Significant new multi-year contract wins, including Tesco, Admiral in H1 and Acromas Insurance (Saga) in H2, reflecting strength of new platform offering, revenue contributions principally from FY2023
• Internal progress: launch of new Group purpose & values; new employee ‘Benefits HUB’
• FY2022 acquisitions: 2,000 vehicle rental fleet (Jun 2021), ChargedEV (Sep 2021) and GRG Resources, emergency services specialist (Mar 2022) providing breadth and scale of product capability
• Enhanced EV infrastructure and services capability; launch of Drive to Zero customer solution; EVs and hybrids on our fleet reflect profile of UK car parc
• High rental demand and reduced vehicle supply positively impacted both residual values and lengthened hire durations; macro supply chain challenges expected to continue throughout FY2023
• Increased branch co-locations driving revenue and cost synergies; continued integration of FMG RS
• Investment programme of site enhancements underway across Group, including EV charging, LED lighting, waste-water recycling and solar panels; IT systems consolidation/upgrade planned for H1 FY2023

Depreciation rate change (from FY2023)

• Carrying book value of earlier purchased cohorts of fleet vehicles have depreciated below current strong resale values; action taken to stop or reduce depreciation from FY2023 on these cohorts until disposal
• No impact on FY2022 or future underlying results. This change will re-phase statutory PBT until vehicles are sold. Non-cash impact only and no overall income change over the remaining life of vehicles

Martin Ward, CEO of Redde Northgate, commented:

“We began FY2022 with good momentum and this continued through the period with strong performance across the business and our key financial metrics were strongly positive for the year. Rental margins improved in both Northgate UK&I and Northgate Spain, and the Redde business contribution grew substantially as it found a new normal for volumes at approximately 90% of pre-COVID-19 levels together with support from new business wins.

“We have made good progress with our ESG strategy and its reporting and have an important role to play with our expertise and fleet in assisting our customers meet their own carbon reduction ambitions as well as delivering our own net zero strategy.

“Our unique mobility solutions platform is now yielding significant new multi-year business wins which I am
confident will continue. The Group has already managed a number of macro-economic challenges since the Merger and with our enhanced offering we are well placed to deliver on our strategy and navigate the current economic backdrop.”

Outlook

The business has traded well across a challenging and volatile economic backdrop in recent years, supported by the structural growth in outsourcing by an increasingly broad customer base. We are enjoying the benefit of an enhanced mobility solutions platform and continue to proactively manage inflation, resource availability and supply chain constraints.

Demand remains high for the Group’s rental offering and as a result, the business expects to retain more of its van fleet this year whilst limiting disposals, with the car fleet growing in line with the business strategy.

The new financial year has started well and the business is well positioned in its addressable markets. Further revenue benefits are expected from new long term contract wins already secured but yet to commence. While the Board is mindful of the economic uncertainty it remains confident that it has the right strategy to deliver long term sustainable value.

Analyst Briefing

A hybrid presentation for sell-side analysts and institutional investors will be held at 9.30am today, 6 July 2022. If you are interested in attending, please email Buchanan on reddenorthgate@buchanan.uk.com to request the joining details. This presentation will also be made available via a link on the Company’s website www.reddenorthgate.com.