COMMERCIAL van hire group Northgate yesterday announced it is on track to meet its three-year expansion plan.

Interim results for the six months ending October 31, showed turnover increased 19.3 per cent to 222.6m. Pre-tax profits rose by 23.2 per cent to 27.8m.

The company rents light commercial vehicles and sells a range of fleet products to businesses.

It employs 250 people in the North-East, and has 12,000 customers in the UK, ranging from tradesmen to large companies, such as distributor TNT.

Phil Moorhouse, managing director of its UK retail operation, said: "We see a big opportunity to continue to convert people to rental and are on track to meet the targets set in our strategy for growth."

He attributed part of the success to a rise in interest in its Norflex product, a flexible contract where businesses can adapt the number of commercial vehicles they hire as required.

Northgate's Spanish subsidiary, Fualsa, performed well and the company expects to open two sites in southern Spain later this month.

It bought Fualsa in May, after previously acquiring a 40 per cent stake.

Darlington's only plc is half-way through a three-year strategy for growth and has secured £500m in funding from banks.

By April 2006, it plans to expand its fleet to 60,000 in the UK and 18,000 in Spain.

It has a fleet of 52,000 vehicles at 76 locations in the UK and 17,000 vehicles at 12 sites in Spain.

Northgate had intended to take its network to 100 locations in the UK and 20 in Spain.

But the number of predicted UK sites needed to operate 60,000 vehicles has fallen.

"We can run more vehicles per site than we anticipated," said Mr Moorhouse.

"We felt that, at a point, a site would become operationally inefficient, but that has not happened.

"It means our costs are lower and gives us the opportunity for growth beyond April 2006."

The company has grown by concentrating on expanding the UK rental market. At present, only ten per cent of the 2.5 million light commercial vehicles on Britain's roads are rented, compared to 30 per cent in the US.

The Spanish hire market represents about 1.5 per cent of the total number of commercial vans.

* Martin Ballinger, former Go Ahead boss, was appointed company chairman yesterday, following the retirement of Michael Waring.