8 December 2020
Redde Northgate plc has reported ‘encouraging momentum’ in its interim results for the six months ended 31 October 2020 with the accelerated integration of FMG Repair Services (FMG RS) highlighted.
Redde Northgate reported total revenues had jumped by more than 50% to £556m for the six months to 31 October 2020, up from £357.8m 12 months earlier.
Hire revenues fell by 6.4%, although vehicle sales revenue surged by 38.2% due to higher volumes and strong market pricing.
Underlying EBIT climbed by 38.7% to £48.7m, while statutory EBIT increased to £34m, from £32.9m.
The report points to how the integration of FMG RS has been a key focus following the acquisition of Nationwide Accident Repair Services at the beginning of September, both in terms of securing the supply chain and in managing volumes between external insurer customers and internal work referred from other Redde businesses.
The report states that “the Board is pleased with progress to date”.
It reads: “Initial trading has, as expected, been loss-making whilst the integration is completed and the 90-day plan executed. We have now secured over 95% of the supply chain and are continuing discussions with many prior and future customers to maximise external revenues.
“The Group remains confident that the acquisition will be earnings enhancing in the first full financial year of ownership.”
Martin Ward, CEO of Redde Northgate, said in the statement: “We have commenced the integration of FMG RS which broadens our service proposition and capabilities in repairs and, in October, building on Redde’s expertise, we launched our accident and incident management product to Northgate customers. We have had a good early response to this and are confident it will be a source of revenue growth for the Group.”
He continued, “We can clearly see the impact of COVID-19 in this set of results, particularly in Redde where accident volumes were depressed in the first quarter. However, these have significant potential to increase when road traffic volumes and incidents revert back closer to historic norms. Meanwhile, the buoyancy in used vehicle markets, particularly in the UK, has led to higher disposal profits, and the Northgate businesses have also both benefitted from an increase in VOH since year-end such that VOH is now above pre-COVID levels.”
The report also highlights the business has continued development of contract hire as a source of vehicle funding with “substantial new contract hire credit lines approved by several lenders in the period thus expanding provision to LCVs in the Northgate fleet. £6m of these credit lines has already been utilised.”
FMG RS is the trading name for the Nationwide Accident Repair Services business and assets acquired on 4 September 2020.