VAN hire group Northgate has hinted it will make another acquisition this financial year.

The Darlington-based plc, which earlier this year said it wanted to move into the European market, has confirmed it has been in talks with several companies.

The firm was unable to say where the companies were based, but it is understood that Northgate is looking to expand into eastern Europe.

The company said in a statement to the stock market: "We continue to talk to a number of target companies and, in line with our timetable, aim to be in a position to move forward with an acquisition during the current financial year.

"We are, however, not yet in a position to give guidance on the territory."

Earlier this year, Northgate reported a 34 per cent rise in pre-tax profits to £75.4m in the year to April 30, buoyed by two acquisitions it had made in the UK and Spain. Turnover increased 41 per cent to £526.5m.

UK managing director Phil Moorhouse told The Northern Echo at the time: "Our plans have now moved from the desktop to having discussions with a number of companies in various countries.

"We are looking in eastern Europe and the accession countries for potential opportunities there."

Northgate, which employs more than 2,000 people, including 400 in the North-East, is the market leader in light commercial vehicle hire in UK and Spain.

Yesterday, the company said it had made a good start to the financial year.

In the UK, it benefited from good utilisation levels, an improved hire rates and a strong used-vehicle market. However, fleet growth was below its target rate.

In Spain, where it completed the second stage of its acquisition of Record Rent a Car last year, Northgate said growth had been in line with expectations.

Last month, it bought the trade and assets of Alquiservicios SA, a vehicle hire company based in Ourense, Spain, with a fleet of 700 vehicles.

Northgate chairman Philip Rogerson said yesterday: "We are confident of a good outcome for the current year and continue to believe the longer-term prospects for the business remain very encouraging."