June 25, 2014 / 6:50 AM / in 4 years

UPDATE 2-Higher van rentals drive Northgate's profit

* Full-year underlying pretax profit 60.3 mln stg vs est 60.02 mln stg

* Revenue 571.5 mln stg vs est 569.7 mln stg

* To open 4 new sites in London by end of October

* Shares rises as much as 4.9 percent (Adds comments from chairman, finance director, analyst; updates share movement)

By Esha Vaish

June 25 (Reuters) - Vehicle rental company Northgate Plc beat market estimates with a 22 percent rise in full-year profit as more businesses leased its vans in Spain and the UK.

Shares in the company rose as much as 4.9 percent, ranking the stock among top percentage gainers on the FTSE-250 Midcap Index on the London Stock Exchange on Wednesday.

While revenue from vehicle hires in the UK grew marginally and that from Spain fell slightly, Northgate said the number of vehicles rented annually in both these markets grew for the first time after four straight years of decline.

Northgate, which rents out light commercial vehicles under flexible contracts to retailers, engineering and distribution companies, said it continued to trade in line with its expectations.

Peel Hunt analyst Andrew Nussey said he expected Northgate’s profit to increase next year as it had changed its depreciation policy again.

Northgate’s share price is likely to rise as the economies it operated in were showing “clearer signs of recovery”, Nussey said while raising his 2015 pretax profit estimate to 75 million pounds from 65 million pounds.

The company, which also provides vehicle monitoring and automotive part procurement services, said underlying pretax profit rose to 60.3 million pounds ($102.3 million) in the year ended April 30, from 49.5 million pounds a year earlier.

Revenue fell 6.3 percent to 571.5 million pounds, as more people chose to rent across it markets allowing the company to sell less vehicles.

Analysts on average expected a pretax profit of 60.02 million pounds on revenue of 569.7 million pounds, according to Thomson Reuters I/B/E/S.

Northgate’s growth has been more sure-footed in the UK where improving business sentiment and lax lending conditions have encouraged companies to increase their capital expenditure and rebuild inventories.

The company, whose UK revenue was boosted by the four new sites it opened in London during the year, has narrowed in on four more sites it intends to open across the city by October end, Finance Director Chris Muir told Reuters.

Northgate was also looking to open a further 18 sites in the UK over the next two to three years, Muir said.

The new sites will be mostly in London, an important area that Northgate had missed out due to high property rates and lack of branches, Chairman Bob MacKenzie said.

The company gets about 51 percent of its revenue from hires made in the UK, while it generates over 26 percent from leasing out vehicles in Spain. The rest comes from selling vans in these two regions.

Northgate raised its final dividend to 6.8 pence per share from 6 pence a year ago.

The Darlington-based company’s shares were up 1 percent at 506.5 pence at 1023 GMT after touching a high of 526 pence. ($1 = 0.5892 British Pounds) (Reporting by Esha Vaish in Bangalore)

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