Northgate set for turnaround

Light commercial vehicle hire business Northgate (LON:NTG) is publishing its full year figures on Tuesday. The results to April 2019 were flagged in a trading statement and it will be current trading and corporate governance issues that will be of most interest.

Trading comments from fully listed Northgate have been cautious and there are a wide range of pre-tax profit forecasts for 2019-20. They start at around £57m and go up to £69m. It is possible that some of the higher end forecasts have not fully taken into account the comments from a couple of months ago.

Analysts expect underlying pre-tax profit to rise £57m to around £61m in the year to April 2019. This shows that there is a disagreement about whether this year’s pre-tax profit will fall or rise. It will certainly not be as high as some analysts were forecasting a matter of months ago.

Commercial vehicle hire is dependent on the strength of the economy and continued uncertainty is hitting the income of Northgate. It is in the middle of a turnaround programme.

The average number of vehicles on hire in both the UK and Spain has risen, although there was a dip in van hire the UK in the fourth quarter.

Spain continues to grow van hire numbers but the rate of growth is slowing. Increasing price competition has offset other improvements in rental margin.

Crystal Amber

AIM-quoted activist investor Crystal Amber has been building up a stake in Northgate. It reached 6% by the end of May. It will be interesting to see whether Crystal Amber will continue to increase the shareholding after the results are published.

Crystal Amber requisitioned a general meeting in order to remove chairman Andrew Page, who subsequently decided to stand down. The requisition was withdrawn even though it also wanted Steve Smith appointed to the board.

There could be news on Tuesday about the search for a new chairman.


Net debt is going to rise from £439m to around £500m. There are additional facilities that can be used of the hire fleet needs to be added to.

The NAV is around 400p a share and this more than underpins the share price of 300.5p. The estimated 2018-19 earnings multiple is eight.

Northgate needs to show that there is progress being made in the improvement in the business and that there is no further deterioration in trading conditions.

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Andrew Hore
Andrew Hore is the publisher of AIM Journal, which is an online monthly publication covering the Alternative Investment Market.