4th Sep 2014 08:34
LONDON (Alliance News) - Redde PLC, formerly known as Helphire Group PLC, Thursday reported a drop in full-year pretax profit due to a number of charges, largely due to the non-repeat of a GBP28.1 million "exceptional" net credit in the prior year's results.
Redde increased its full-year dividend to 6.85 pence from 1.65p, saying this reflects its strong cash flow. In addition, the company said its new financial year has started well, with performance in the first two months in line with its expectations.
Redde shares were Thursday quoted up 6.3% at 65.40 pence, putting it among the top 10 risers on AIM in morning trade.
In a statement, Redde, which provides accident management and legal services, said it made a GBP10.5 million pretax profit in the year ended June 30, compared with a GBP32.4 million pretax profit in the corresponding period last year. Trading profit, which is a measure of operating profit from continuing operations less income from associates, rose to GBP10.3 million from GBP3.0 million.
The net credit for the 2013 financial year largely reflected a GBP33.7 million credit in relation to the difference in the fair value of shares issued as part of Redde's refinancing, compared with the associated debt extinguished. This was partially offset by a GBP4.9 million charge due to the exit from surplus properties and a share-based payment charge of GBP100,000. The 2014 results showed a GBP1.4 million pretax net charge, due to a credit on the exit from certain leases being more than offset by costs of acquisitions and share payments on executive incentive schemes.
Revenue fell to GBP197.4 million - including GBP8.9 million from four months' trading by the NewLaw group of companies, acquired in February - from GBP204.8 million last year, which included GBP13.9 million of non-recurring referral fees relating to personal injury cases. These fees ceased from April 1, 2013 due to a ban on such payments.
Excluding personal injury fee revenue, and on a like-for-like basis, revenue fell by GBP2.4 million. Redde said this was mostly due to the previously reported planned reduction in low margin, direct hire business, which was largely offset by increases in revenue from core credit hires, and also greater throughput in our repair services.
However, gross profit was GBP6.1 million higher than the corresponding period last year, as the group reported a gross margin of 26.4%, up from last year's 22.5%. Without the acquisition of NewLaw gross margin was 23.5%.
Administrative expenses fell to GBP41.9 million from GBP43.1 million.
"On a like-for-like basis the improved margin percentage principally reflects the cessation of the low-margin personal injury referral fee activity from April 1, 2013, better margins flowing from the changes in the mix of cases handled and a number of improvements seen in our supply chain," Redde said in a statement.
Redde also said that it doesn't expect a Competition and Markets Authority investigation into the UK private motor insurance market to have a "material financial impact" on the group, due to changes it has made to its business model in anticipation of the reforms.
The results follow Redde's February acquisition of NewLaw, within months of a GBP60.0 million share placing. Redde on Thursday said GBP24.8 million of that amount remains available for investment, adding that it is currently reviewing opportunities.
"The results have exceeded our earlier expectations and cash flow has been strong. Redde has a robust, profitable, cash generative business capable of sustaining attractive dividends. We continue to make excellent progress in developing the business; Redde is very well positioned within an evolving marketplace and we have funds to support growth," Chief Executive Martin Ward said in a statement.
Redde said its net cash inflow from operating activities fell to GBP24.8 million in the recent year from GBP31.2 million a year before.
By Samuel Agini; [email protected]; @samuelagini
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