Takeover accelerates Northgate expansion

Dec 12 2007 by Chris Knox, The Journal

VEHICLE hire company Northgate has revealed that it is on target to increase its turnover by more than 10% on the same day that it emerged that it had acquired a rival company.

In its interim results, the Darlington-based company revealed that it had increased its half-year turnover in 2007 by 6.4% to just under £279m compared to the same period during the last financial year.

This represents a 16% increase in profits to £43.9m in the first six months to October 31, 2007, compared to the same period in 2006.

The trading results were buoyed by the announcement that the 26-year-old business had bought small family-run rival Hampsons Self Drive Hire for £9.8m plus an acquired debt of £7.7m.

The purchase brings the size of Northgate’s total fleet to around 68,500, a rise of 1,600, and also increases its market share by a half a percentage point to 18%.

It also adds 50 jobs to Northgate, which now has a workforce in excess of 3,000, with around 2,000 in the UK and 1,000 based at its Spanish operations.

Phil Moorhouse, managing director of Northgate, said: “Hampsons has built a strong reputation for providing quality vehicles and excellent customer service over many years.

“Northgate will continue to grow the Hampsons brand. Customers will also gain access to a range of central resources that a business the size of Northgate provides.”

Hampsons, based in Newark, Nottinghamshire, will maintain its brand name and increases Northgate’s presence in the UK by adding nine sites to its business, which now totals 90, operating under 21 subsidiary companies from Aberdeen to Plymouth.

The positive trading statement also signaled a shareholder interim dividend increase of 15% to 11.5p, compared to 10p last year. Shares rose by 2.78% to 740p.

The group cited further expansion in Spain as a major driver for much of its growth in 2007, which included the acquisition of Alquiservicios SA, a business based in Orsene with a fleet of 700 vehicles.

The group says its expansion in Spain has been helped by a number of tax advantages available to overseas companies looking to invest in the country.

Steve Smith, chief executive at Northgate, said: “We have continued to exceed our expected growth in Spain and are looking to build on this in the new year.”

Philip Rogerson, chairman at Northgate, said: “Trading in both the UK and Spain is in line with our expectations and the board remains confident of a satisfactory outcome for the full financial year.”

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Northgate: In figures

£278.9m: Turnover in the six months to October 31, up 6.4% on the previous year.

£43.9m: Pre-tax profit, up 16% on 2006.

47.3p: Earnings per share, up 27% on 2006.

11.5p: Interim dividend, an increase of 15% on 2006.