11th Sep 2006 07:02
Helphire Group PLC11 September 2006 Date 11 September 2006 Contacts Mark B Jackson/David E Lindsay Tel: 01225 321 205 / 321 298 Helphire Group plc Chris Steele/ Tarquin Edwards Tel: 07979 604 687 / 07879 458 364 Adventis Financial PR Tel: 020 7034 4759 / 020 7034 4758 Helphire Group plc Preliminary results for the fifteen months ended 30 June 2006 Helphire Group plc ("Helphire" or the "Company"), the non-fault accidentmanagement assistance and related services company, today announces its resultsfor the fifteen-month period ended 30 June 2006. Highlights include: • Growth in revenue of 95% (annualised 65%) • Gross profit grew by 79% (annualised 50%) • Growth in adjusted* operating profit 107% (annualised 76%) Growth in statutory operating profit 64% (annualised 40%) • Growth in adjusted* diluted EPS 62% Growth in statutory diluted EPS 19% • Dividend for the financial year increased from 6.0p to 10.0p • Hire volumes increased by 86% (annualised 55%) • Credit Repair cases up by 99% (annualised 66%) • Personal Injury cases up 107% (annualised 69%) The highlights compare the fifteen-month period to 30 June 2006 to thetwelve-month period ended 31 March 2005. Annualised percentages are for the 12month period to 30 June 2006 compared to the 12 month period to 31 March 2005. * Adjusted financial information in the current period excludes the impact ofamortisation of intangible assets and charges relating to share options andAlbany claims. The comparative figure for the 12 months to 31 March 2005 alsoexcludes a profit on the sale and leaseback of the Group's head office andimpairment charge relating to goodwill and intangible assets. These items areshown separately in the consolidated income statement. Commenting on the results, Chief Executive Mark Jackson said: "This has been another extremely successful year and the Company is confident offurther strong progress in the current year." Chairman's Statement Chairman's Statement I am delighted to introduce this excellent set of results for the 15-monthfinancial period to 30 June 2006. The Company has continued to grow strongly throughout this period and the coremarket place in which we operate is developing at a rapid pace. Managing expansion at the rate which we are experiencing is a major challengefor all of the management and staff and I would like to express my thanks tothem all for the hard work which has made this possible. The new financial period has started well and we look forward with optimism tothe rest of the year. Rodney Baker-BatesChairman8 September 2006 Chief Executive's Statement Overview The last 15 months has seen a significant continuation of growth in all of theGroup's activities with both an acquisition, Swift Rentacar the prestige carcredit hire business, and several large new key accounts being won. These statements reflect the trading and financial activity for the Group forthe 15 month period ended 30 June 2006. Due to the impact on our results ofincreased business volumes during the winter months, the Group's financial yearend has been changed to 30 June to enable easier comparison of the two halves ofeach year. Trading Results Turnover has grown to £231.4m (12 months to 31 March 2005: £118.4 million), anannualised increase of 65%, and includes a £10.9m contribution from Swift whichwas acquired in September 2005. Hire volumes increased by 55% (annualised) to133,170 (12 months to 31 March 2005: 71,433), credit repair cases by 66%(annualised) to 49,236 and Personal Injury cases by 69% (annualised) to 32,933.Profit before tax increased 65% from £17.2m to £28.4m. However, adjusted* profitbefore tax increased by 118% from £14.9m to £32.5m. Annualised percentages arefor the 12 month period to 30 June 2006 compared to the 12 month period to 31March 2005. Operations The Group continues to focus on the supply of hire cars to non-fault victims ofmotor accidents and the generation of additional revenue streams from thedevelopment of related services. Levels of interest from insurers continue toincrease with most major motor underwriters now beginning to use services suchas those we provide or actively investigating the possibility of doing so. The policyholder base at Angel Assistance, our legal expenses business, hascontinued to grow, increasing to over 800,000 policyholders by the end of thisfinancial period. Hires provided to these policyholders grew in proportion. Customer satisfaction continues to be a major focus of the Group and ismonitored closely on a monthly basis. It has been maintained throughout the yearat 98% 'satisfied' or 'very satisfied' with the service provision. For thoseinvolved in an accident, the quality of service they receive is extremelyimportant and, we believe, a major driver of new business. The vehicle fleet continues to grow and now comprises over 10,500 vehicles and27 depots with plans to open more in the next 12 months in order to furtherenhance the geographical footprint of the business and continue to increaseoperational efficiency. Total Accident Management, the fleet claims fulfilment arm of the Group,continues to grow and has moved to new premises in Bristol. Swift Acquisition On 2 September 2005 the acquisition of Swift Rentacar was announced. SwiftRentacar specialises in the supply of prestige vehicles on credit hire todrivers involved in non-fault accidents. It is a leader in the prestige segmentof the credit hire market. Swift derives the vast majority of its business fromreferrals by prestige dealerships and dealership groups with whom it has closerelationships. Swift aims to provide customers with the same make of vehicle asa replacement - described as 'marque for marque' replacement - which isattractive to both the customer and the dealership. Swift has been successfully integrated within the Group. In particular it hasbenefited from access to the Group's larger fleet infrastructure and theincreased choice of vehicles this brings. Swift is moving to larger premises inNorthwich in October of this year. Infrastructure The Pinesgate call centre facility in Bath of over 60,000 square feet is nowfully occupied, housing over 900 staff. The Albany call centre in Peterlee, County Durham has space for furtherexpansion of the Albany business. Currently it houses just over 200 staff with acapacity for 400. A call centre facility was established in Bristol in June 2006, which will allowfor further room for expansion as the strong organic growth continues. The major business process re-engineering programme, which commenced in 2003,continues to progress. The first new suites of software commenced use in a'model office' environment in mid-August 2006. Dividends A second interim dividend payment of 3.0p was announced in June 2006, giving atotal dividend of 6.0p for the period to 31 March 2006. I am pleased to announce a final dividend for the period of 4.0p (12 months to31 March 2005: 3.7p), an increase of 8%. This gives a total dividend for theperiod of 10.0p, an increase of 67%. The final dividend will be paid on 23November 2006 to shareholders on the register at 27 October 2006. Outlook The new financial year has started well. Organic growth is strong and anyopportunities for growth by acquisition continue to be fully evaluated. On 2December 2005 we were pleased to welcome as our new Non-Executive Chairman,Rodney Baker-Bates, who has now established himself in that role. We are today once again announcing record trading profits compared to theprevious financial period. Growth in the business continues to be very strongand our market continues to expand as credit hire services are utilised morewidely. Whilst this inevitably leads to increased competition, it also leads toincreased awareness and opportunity and the Board's confidence in the future ishigh. * Adjusted financial information in the current period excludes the impact ofamortisation of intangible assets and charges relating to share options andAlbany claims. The comparative figure for the 12 months to 31 March 2005 alsoexcludes a profit on the sale and leaseback of the Group's head office andimpairment charge relating to goodwill and intangible assets. These items areshown separately in the consolidated income statement. Mark JacksonChief Executive8 September 2006 Finance Director's Review Change in year end The Group has changed its financial year-end from 31 March to 30 June to removethe effect of seasonality on the two halves of the financial year. Road accidentactivity is at its highest during the winter months. By changing the year-end,this period is split equally between the two halves of the year and results in amore meaningful representation of the Group's performance. In accordance with statutory obligations I refer to the financial data for thefifteen-month period to 30 June 2006 as compared with the 12 months to 31 March2005. In order to facilitate comparisons, I have detailed the Group's unauditedkey financial and performance data for the 12 months to 30 June 2006 and theaudited 12 months to 31 March 2005 at the end of my report. Turnover Turnover has grown by 95% to £231.4m (12 months to 31 March 2005: £118.4m) andincludes a £10.9m contribution from Swift which was acquired in September 2005.Hire volumes increased by 86% to 133,170 (12 months to 31 March 2005: 71,433),credit repair cases increased by 99% to 49,236 (12 months to 31 March 2005:24,728) and PI cases increased by 107% to 32,933 (12 months to 31 March 2005:15,941). The changing mix in our business has contributed to an increase in theaverage turnover per hire case by 5% to £1,738 (12 months to 31 March 2005:£1,651). As noted in my report last year, Helphire has benefited from an increase in theproportion of cases being referred by key accounts which include nationwideinsurance brokerages and insurance companies. The acquisition of Swift, whichsources business primarily from prestige dealerships throughout the UnitedKingdom, has given the Group a stronger foothold in the prestige sector of thecredit hire market. We have recently consolidated the Group's entire automotivedealer-referred work into one division in order to increase our focus on thisarea of the referrer market. Gross margins Gross profit grew by 79% to £97.5m (12 months to 31 March 2005: £54.4m). As apercentage, the gross margin is influenced by the unit sale value, the directcost and the mix of hire, repair and personal injury income. During the 15 monthperiod to 30 June 2006 the average value of a claim has increased due to anincreased contribution from credit repair and personal injury. As far as directcosts are concerned, fleet cost as a percentage of hire turnover has fallenwhilst referral commissions have increased. The net effect arising from thesefactors has been a reduction in the gross margin from 46% to 42%. It is theBoard's view that the margin can be maintained at this level during the currentfinancial year. Operating margin Operating margin decreased from 17% to 14%. In June 2005 I reported that theadjusted* operating margin for the 12 months to 31 March 2005 had increasedconsiderably to 15% as compared with the 11% generated in 2004. I anticipatedfurther expansion in the adjusted* operating margin in 2006 and am delighted toreport that this has been achieved with the adjusted* operating margin havingincreased to 16% in the fifteen-month period to 30 June 2006. Further expansionis expected during the next accounting period as the company utilises its fixedasset base more efficiently and we derive further economies from our increasingscale. Financial performance Profit before tax increased by 65% to £28.4m (12 months to 31 March 2005:£17.2m). Adjusted* profit before tax increased by 118% to £32.5m (12 months to31 March 2005: £14.9m). The Group is now paying tax following the utilisation of losses brought forwardand consequently the tax charge has affected the growth in earnings per share ashas the 15% increase in the number of shares in issue which were used to fundthe acquisition of Swift, the repayment of debt and to satisfy the exercise ofshare options. Debtors, working capital and cash flow Outstanding claims at 30 June 2006 stood at £111.9m (2005: £71.5m) reflectingthe growth in the core business and the acquisition of Swift. Processing claims for the Group's services in order to achieve the optimumsettlement in terms of value and time is key to Helphire's profitability and itsworking capital management. Settlement of claims quickly without undue marginsacrifice requires skilled personnel and investment in processing systems,including information systems. Cash collection has improved significantly inrecent years and debtor days have fallen from 221 days in the year to 31 March2005 to 206 days in the 15 month period to 30 June 2006. Achieving furtherreductions in the average age of claims outstanding continues to be a keyobjective and initiatives in this area include the recent appointment of aCollections Managing Director who sits on the Group Operating Board andinvestment in additional claims handling resource as well as the pursuit ofearly settlement protocols with insurers. Interest rate risk The Group finances its operations from a mixture of equity, bank borrowings andlease financing. The Group borrows in sterling at floating rates of interestwith a margin of between 0.95% and 2.00% above LIBOR. No interest rate caps orswaps are used to manage exposure to interest rate fluctuations, although it isexpected that a hedging strategy will be implemented during the currentfinancial year. Liquidity risk I am pleased to announce that during the year, RBS has joined HBOS in theCompany's banking syndicate. The syndicate provides combined facilities of £80m,which mature after more than 12 months. At 30 June 2006 £54m of these facilitieshad been utilised of which £30m relate to the acquisitions of Swift and Albany. Critical judgements As detailed in the accounts, the Directors have made critical judgements inrelation to expected future adjustments on settlements of claims against motorinsurers and in relation to depreciation of the vehicle hire fleet. By theirvery nature, these areas are inherently judgemental. Capital expenditure Capital expenditure during the year amounted to £60.4m with £56.4m used to fundthe acquisition of vehicles; £3.3m to fund IT and telecom equipment and servicesand £0.7m to fund fixtures and fittings. Tax During the past five years the Group has benefited from tax losses broughtforward which has resulted in a zero tax charge. During the fifteen month periodto 30 June 2006 the losses available to the Group diminished resulting in aneffective tax rate of 19%. It is expected that the effective tax rate willincrease to 30% for the year to 30 June 2007. Earnings per share The diluted basic earnings per share increased by 19% to 17.27p (12 months to 31March 2005: 14.49p). These figures were distorted by certain items as adjusted*below and an effective tax rate of 19% compared with zero in the 12 months to 31March 2005. On an adjusted* basis and in addition applying a 19% tax charge inthe 12 months to 31 March 2005, diluted earnings per share was 20.42p (12 monthsto 31 March 2005: 10.13p), an increase of 102%. Share capital During the year the Group's capital reserves were increased by £43.1m as aresult of the issue of shares relating to the acquisition of Swift and theexercise of options. International Financial Reporting Standards (IFRS) The Group has undergone an IFRS review and has published its accounts inaccordance with IFRS as required. Pro forma information (unaudited) 12 Months to 30 12 Months to 31 Change ** June 2006 March 2005 (Unaudited) £ million £ million %Turnover 195.4 118.4 65%Gross profit 81.4 54.4 50%Gross margin(%) 42% 46%Adjusted*operatingprofit 31.9 18.2 76%Adjusted*operatingmargin (%) 16% 15%Operatingprofit 28.6 20.4 40%Amortisation (2.3) (3.5)Costs / incomeadjusted* (1.0) 5.8Profit beforetax 24.7 17.2 44%Profit aftertax 19.2 17.3 11%Adjusted* EPSdilutedapplying taxcharge of 19%in both years(p) 17.01 10.13 68%Hire volumes(no.) 110,725 71,433 55%Repair volumes(no.) 41,506 24,728 68%PI volumes(no.) 26,870 15,941 69% ** 12 months to June 2006 vs 12 months to March 2005. The unaudited results forthe 12 months ended 30 June 2006 are actual results extracted from themanagement accounts. * Adjusted financial information in the current period excludes the impact ofamortisation of intangible assets and charges relating to share options andAlbany claims. The comparative figure for the 12 months to 31 March 2005 alsoexcludes a profit on the sale and leaseback of the Group's head office andimpairment charge relating to goodwill and intangible assets. These items areshown separately in the consolidated income statement. David E Lindsay Group Finance Director 8 September 2006 Consolidated Income Statement For the 15 months ended 30 June 2006 15 months to 30 Year Ended 31 June 2006 March 2005Continuing operations £'000 £'000------------------------------------------------------------------------------------------ Revenue Existingoperations 220,472 118,442 Acquisitions 10,915 ------------------------------------------------------------------------------------------- Total Revenue 231,387 118,442 Cost of sales (133,903) (64,056)------------------------------------------------------------------------------------------ Gross profit 97,484 54,386------------------------------------------------------------------------------------------ Administrative expenses:Goodwillimpairmentcharge - (1,453)Intangibleassetimpairmentcharge - (1,000)Amortisationof intangibleassets (2,870) (1,048)Profit on saleof tangiblefixed assets - 6,175IFRS 2share-basedpayment charge (722) (412)Albany claims (578) -Other (63,351) (38,150)------------------------------------------------------------------------------------------ (67,521) (35,888)Otheroperatingincome 3,452 1,915------------------------------------------------------------------------------------------ Operating profit analysed between:------------------------------------------------------------------------------------------ Existingoperationsexcludingprofit on saleof tangiblefixed assets 32,283 14,238Profit on saleof tangiblefixed assets - 6,175------------------------------------------------------------------------------------------Existingoperations 32,283 20,413Acquisitions 1,132 -------------------------------------------------------------------------------------------Totaloperatingprofit 33,415 20,413Finance costs (5,048) (3,255)------------------------------------------------------------------------------------------Profit beforetax 28,367 17,158Tax on profiton ordinaryactivities (5,484) 102------------------------------------------------------------------------------------------Profit for theperiod 22,883 17,260------------------------------------------------------------------------------------------ Earnings per shareBasic 1 17.67p 14.80p Diluted 1 17.27p 14.49p Adjusted basic 1 20.89p 12.86p Adjusteddiluted 1 20.42p 12.59pConsolidated Statement of Changes in EquityFor the 15 months ended 30 June 2006 Share Share Equity Retained Total capital Premium Reserve earnings account £'000 £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------- Balance at 1 April 2004 5,800 22,186 1,335 11,335 40,656 Profit for the period - - - 17,260 17,260 Issue of new ordinary shares 107 1,750 - - 1,857 Share based incentive plans - - 412 - 412 Deferred tax - share basedincentive plan - - (162) - (162) Dividend - - - (5,613) (5,613) -------------------------------------------------------------------------------------- Balance at 1 April 2005 5,907 23,936 1,585 22,982 54,410 Profit for the period - - - 22,883 22,883 Issue of new ordinary shares 892 42,170 - - 43,062 Share based incentive plans - - 722 - 722 Deferred tax - share basedincentive plan - - 2,276 - 2,276 Dividend - - - (12,520) (12,520)-------------------------------------------------------------------------------------- Balance at 30 June 2006 6,799 66,106 4,583 33,345 110,833-------------------------------------------------------------------------------------- Consolidated Balance Sheet As at 30 June 2006 30 June 2006 31 March 2005 £'000 £'000---------------------------------------------------------------------------------------------- Non-current assetsGoodwill 67,052 42,644Intangible assets 6,259 6,254Property, plant and equipment 50,702 14,442Investments 300 300Deferred tax asset 6,733 3,973---------------------------------------------------------------------------------------------- 131,046 67,613---------------------------------------------------------------------------------------------- Current assets Trade and other receivables 125,938 81,558Cash and cash equivalents 8,758 3,568---------------------------------------------------------------------------------------------- ------- 134,696 85,126----------------------------------------------------------------------------------------------Total assets 265,742 152,739 Current LiabilitiesTrade and other payables (37,928) (22,776)Tax liabilities (3,076) -Obligations under finance leases (37,230) (11,583)Short-term borrowings andoverdrafts (48,966) (39,883)---------------------------------------------------------------------------------------------- (127,200) (74,242)---------------------------------------------------------------------------------------------- Net current assets 7,496 10,884 Non-current liabilities Bank loans (15,487) (20,111)Deferred tax liability (2,467) (1,739)Obligations under finance (9,755) (2,237)leases ---------------------------------------------------------------------------------------------- (27,709) (24,087)----------------------------------------------------------------------------------------------Total liabilities (154,909) (98,329)----------------------------------------------------------------------------------------------Net Assets 110,833 54,410---------------------------------------------------------------------------------------------- Equity Share capital 6,799 5,907Share premium account 66,106 23,936Equity reserve 4,583 1,585Retained earnings 33,345 22,982----------------------------------------------------------------------------------------------Total equity 110,833 54,410---------------------------------------------------------------------------------------------- Consolidated Cash Flow Statement for the 15 months ended 30 June 2006---------------------------------------------------------------------------------------------------------------------- £'000 15 months to 30 £'000 Year ended 31 June 2006 March 2005 £'000 £'000---------------------------------------------------------------------------------------------------------------------- Cash flows from operating activitiesOperatingprofit 33,415 20,413Depreciation,amortisationand impairmentcharges 14,486 7,502Losses /(gains) onsale oftangible fixedassets 4 (6,141)Share basedpayment charge 722 412Increase indebtors (39,361) (25,216)Increase increditors 5,851 7,193----------------------------------------------------------------------------------------------------------------------Cash generatedfrom operators 15,117 4,163 Bank and loaninterest paid (4,511) (2,710) Interestelement offinance leaserentals (537) (545)---------------------------------------------------------------------------------------------------------------------- (5,048) (3,255) Taxation paid (2,322) (222)----------------------------------------------------------------------------------------------------------------------Net cash flowfrom operatingactivities 7,747 686 Cash flows used in investing activities Purchase ofproperty,plant andequipment (6,071) (404) Purchase ofotherintangibleassets (2,585) - Purchase ofunlistedinvestments - (300) Proceeds fromsale of plantand equipment 14,716 862 Proceeds fromsale offreeholdproperty - 17,779 Acquisitions (17,574) (19,660) Cash and cashequivalentsacquired 395 (10,281)---------------------------------------------------------------------------------------------------------------------- Net cash flowused ininvestingactivities (11,119) (12,004) Cash flows (used in) / from financing activities Net proceedsfrom issue ofordinary sharecapital 39,837 1,857 Net proceedsfrom issue ofnew loans - 33,447 Repayment ofborrowings (19,372) (13,765) Capitalelement ofother loanrepayments - (556) Finance leaseprincipalrepayments (23,270) (5,019) Dividends paidtoshareholders (8,441) (5,613)---------------------------------------------------------------------------------------------------------------------- Net cash flow(used in) /from financingactivities (11,246) 10,351----------------------------------------------------------------------------------------------------------------------Decrease incash and cashequivalents (14,618) (967)---------------------------------------------------------------------------------------------------------------------- Cash and cashequivalents atbeginning ofperiod 195 1,162----------------------------------------------------------------------------------------------------------------------Cash and cashequivalents atend of period (14,423) 195---------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents consists of:Cash at bankand in hand 4,736 3,568Cash held inrestricteddeposit 4,022 -Bank overdraft (23,181) (3,373)---------------------------------------------------------------------------------------------------------------------- (14,423) 195---------------------------------------------------------------------------------------------------------------------- The cash held in restricted deposit is held in relation to additionalconsideration for the acquisition of a subsidiary. Notes to the Financial Information 1 Earnings per Share The calculation of the basic and diluted earnings per share is based on thefollowing data: 15 months to 30 Year ended 31 June 2006 March 2005Earnings £'000 £'000-------------------------------------------------------------------------------- Earnings forthe purposesof basic anddilutedearnings pershare beingnet profitattributableto equityholders 22,883 17,260-------------------------------------------------------------------------------- Number of shares Number Number--------------------------------------------------------------------------------Weightedaverage numberof ordinaryshares for thepurposes ofbasic earningsper share 129,523,905 116,612,903Effective ofdilutivepotentialordinaryshares - shareoptions 2,987,986 2,477,818--------------------------------------------------------------------------------Weightedaverage numberof ordinaryshares for thepurposes ofdilutedearnings pershare 132,511,891 119,090,721-------------------------------------------------------------------------------- Adjusted earnings per share Adjusted earnings per share is based on weighted average number of shares as forthe unadjusted earnings per share and the profits for the period adjusted forthe following expenses (income): 15 months to 30 Year ended 31 June 2006 March 2005 £'000 £'000---------------------------------------------------------------------------------------- Amortisationof intangibleassets 2,870 1,048Albany claims 578 -IFRS 2share-basedpayment charge 722 412Goodwillimpairmentcharge - 1,453Intangibleassetimpairmentcharge - 1,000Profit on saleof tangiblefixed assets - (6,175)---------------------------------------------------------------------------------------- 4,170 (2,262)---------------------------------------------------------------------------------------- 2 Segmental Information The financial statements are in respect of the group's sole business segment ofnon-fault accident service provisions, conducted wholly in the United Kingdom. 3 Status of Audit The financial information set out above does not constitute the company'sstatutory accounts for the fifteen month period ended 30 June 2006 or the yearended 31 March 2005, but is derived from those accounts. Statutory accounts forthe year ended 31 March 2005 have been delivered to the Registrar of Companiesand those for the fifteen month period ended 30 June 2006 will be deliveredfollowing the company's annual general meeting. The auditors have reported onthose accounts; their reports were unqualified and did not contain statementsunder s. 237(2) or (3) Companies Act 1985. 4 Basis of Preparation The financial information for the fifteen month period ended 30 June 2006 hasbeen computed in accordance with International Financial Reporting Standards(IFRSs). This is the first financial period for which IFRSs have applied.Comparative financial information for the year ended 31 March 2005 has beenrestated accordingly. Whilst the financial information included in this preliminary announcement hasbeen computed in accordance with IFRSs, this announcement does not itselfcontain sufficient information to comply with IFRSs. The company expects topublish full financial statements that comply with IFRSs later in September2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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