Vehicle hire firm Redde Northgate has launched a £30m share buyback programme on the back of record results.
The van specialist told investors it thinks liquidity in its ordinary shares is low and has instructed brokers Numis Securities to mount a buyback which may exceed 25% of the average daily trading volume on each platform its shares are traded on. The move will see Numis purchase up to 23,957,523 shares on behalf of the firm, over the course of 12 months.
Redde told the London Stock Exchange it had made a good start to its current financial year with robust demand and "good momentum" across its business, which includes hire and accident management and repair services.
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Earlier this month the Darlington-based FTSE250 firm reported record results including a near 20% rise in revenue to £1.49bn, as well as a 9.7% rise in pre-tax profits to £178.1m. Performance had been particularly strong across the group's business in northern Spain where a strong economy had contributed to demand that had driven rental volumes.
Redde said the buyback was a way to deliver value for shareholders while keeping debt at a prudent level. Purchases as part of the programme will now by made from time to time.
In its notice to the market, the firm said: "The group is highly cash generative, with underlying cash generation of £191m after investing in net fleet replacement. After financing and tax, in FY2023 the group had cashflows of over £137m available for investment in growth and return to shareholders, together with substantial headroom on its borrowing facilities.
"The business returned over £105m in the form of dividends and share buyback and invested over £130m in merger and acquisition and fleet growth, utilising the strength of the balance sheet. At FY2023 close, leverage was 1.5x net debt to EBITDA, comfortably in the middle of the group's targeted 1-2x range, with 62% of the group's debt fixed, including private placement at 1.3% with maturities extending out to 2031 giving longer term rate protection. The overall cost of borrowings at 30 April 2023 was 3.1%."
