ReddeNorthgate Update

The owner of Auxillis issued a trading update on 18th May 2020, a copy of which is available at https://reddenorthgate.co.uk/investor-relations/rns-announcements/rns-announcement/3766397


The most significant part of the release relates to the impact of Covid-19 on current trading and the expectations of a recovery. Whilst not just relating to their credit hire business (Redde acquired the rental company Northgate plc earlier this year), the Group confirmed that the impact of the measures taken thus far have impacted revenue between £3m - £4m per month with the net number of vehicles returned to branches from lockdown up until the end of April was 6% in UK&I. This appears to imply a deterioration in headline utilisation.


Looking forward, the Group claim that it is still too early to make any precise assessment as to the ongoing revenue, earnings and cash impacts Covid-19 will have on the Group. They report having undertaken detailed modelling of various scenarios and are using a base case and downside set of assumptions to scenario plan outcomes which are evolving and updated regularly. 


Their current base case assumptions include lockdown continuing during May and a slow easing of restrictions over the following two months, then a gradual return to a more normalised trading environment by the end of the financial year, whilst the current downside assumptions include two more months of lockdown to end of July and a slow easing of restrictions over the following three months, then a gradual return to a more normalised trading environment over a longer period. 


Based on the analysis of the base case and downside case scenarios, the Group do not anticipate having to secure any additional funding requirements for Covid-19 purposes.

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