14th Jun 2005 07:00
Helphire Group PLC14 June 2005 Date 14 June 2005 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 Binns & Co Tel: 020 7786 9600 Helphire Group plc Preliminary results for the year ending 31 March 2005 Helphire Group plc ("Helphire" or the "Company"), the non-fault accidentmanagement assistance and related services company, today announces its resultsfor the year ending 31 March 2005. Highlights include: • Profit before tax, amortisation and exceptionals rose 100% to £14.8m (2004: up 36%)• Earnings per share increased by 112% to 14.78p (2004: up 10%)• Gross profits up by 54% to £54.0m (2004: up 37%)• Operating profit increased by 73% to £14.4m (2004: up 52%)• Turnover up by 57% to £118.0m (2004: up 35%)• Total dividend for the year up by 33% to 6.0p• Number of hires up by 49% to c71,000• Acquisition and integration of Albany The chairman of Helphire Group, Michael J Symons, said today: "This has been another excellent year for Helphire with continued growthin demand for our services. Growth in turnover of 57%, has resultedfrom a greater level of referrals from existing sources, the addition of new keyaccounts and the acquisition of Albany." Chairman's Statement Overview This has been another excellent year for Helphire with continued growth indemand for our services and completion of both the major infrastructuredevelopment project and the acquisition of Albany. Growth in turnover resulted from a greater level of referrals from existingsources, the addition of new key accounts and the acquisition of Albany.Increased referrals from existing sources resulted from a mixture of growth inthe key accounts motor policyholder base and from the provision of services toadditional categories of client. The Board is optimistic that further organicgrowth can be generated in the current financial year. Financial Results Turnover for the year was £118.0m, an increase of 57% from the same period lastyear (2004: £75.3m) with the number of hire cases in the year increasing by 49%to c.71,000 (2004: c. 48,000). Gross profits of £54.0m were generated, anincrease of 54% (2004: £35.1m) at a margin of 46% (2004: 47%). Operating profitwas increased by 73% to £14.4m (2004: £8.3m). Pre-tax profit on ordinaryactivities before exceptional items and amortisation was £14.8m, an increase of100% (2004: £7.4m). Earnings per share increased by 112% to 14.78p (2004:6.97p). Bank borrowings and loan notes at the year end were £60.0m (2004:£23.8m) including £47.0m of acquisition finance for Albany. Operations The Company continues to focus on the supply of services to non-fault accidentvictims and the generation of additional revenue streams from the development ofthese services. Levels of co-operation with insurers continue to improve with anumber of initiatives underway to improve the speed and efficiency of claimsprocessing. I refer below to the very successful integration of Albany and theassociated benefits. The customer base is still expanding with two more major insurance companiesrecently starting to refer cases. The policyholder base of Angel Assistance, our legal expenses business hascontinued to grow, increasing to over 600,000 policyholders by the end of theyear excluding those added to the Group through the acquisition of Albany. Hiresprovided to these policyholders grew by 10% to over 15,000. Customer satisfaction is very important and is monitored closely on a monthlybasis. It has been maintained throughout the year at 98% 'satisfied' or 'verysatisfied' with the service provision. The vehicle fleet has continued to growand now comprises over 7,000 vehicles and 23 depots with plans to open a furtherseven in the next twelve months in order to further enhance the geographicalfootprint of the business and increase operational efficiency. Total Accident Management, the fleet claims fulfilment arm of the Groupcontinues to grow, currently providing services to a combined fleet of over50,000 vehicles. Albany Acquisition On 14 October 2004, the acquisition of Albany was announced. Albany is a leadingparticipant in the Uninsured Loss Recovery market and has over 1.5m legalexpense insurance policyholders which, like Angel Assistance, generatesignificant referrals of non-fault claims. Since the acquisition, an integration project team has worked to realisesynergistic benefits between the two Companies. This project is almost complete,in particular the fleet infrastructure of Albany, which at acquisition comprised1,600 vehicles and 8 depots, has now been fully integrated. The Albanypolicyholder base is now generating on average in excess of 2,000 hires permonth. Infrastructure Development The Pinesgate call centre facility of over 60,000 square feet based in Bath isnow complete and fully operational. This facility, along with the 20,000 squarefeet Albany call centre in Peterlee, County Durham provides adequate space bothfor existing and medium term call centre facility requirements. A sale andleaseback of the Pinesgate buildings was completed in February 2005 resulting inan exceptional profit of £6.2m, as detailed in our Trading Statement in April. The major computer software development program, commenced in 2003, is nowprogressing well. Design and specification of the new operational system is nowcomplete and development work is underway. It is anticipated that the firstphase of the new system will be operational by the end of the current financialyear. Dividends An interim dividend payment of 2.3p (2003: 2.0p) was made in January. I ampleased to announce a final dividend for the year of 3.7p (2004: 2.5p), anincrease of 48%. This gives a total dividend for the year of 6.0p (2004: 4.5p),an increase of 33%. This will be paid on 15 September 2005 to shareholders onthe register at 24 June 2005. Year-end Change At the time of the interim statement, in December 2004, we announced ourintention to move the financial year end for the Group to 30 June with effectfrom 1 April 2005. It is planned to announce the result of the first six monthstrading to 30 September 2005 in December 2005 followed by a further interimreview for the 12 months to 31 March 2006 allowing for a year-on-yearcomparison. The audited results for the 15 month period to 30 June 2006 will beannounced in September 2006. Three dividends will be paid, an initial interim inabout January 2006, a second interim in about September 2006 and a finaldividend in about December 2006. Outlook The new financial year has started well with trading in advance of managementexpectations. Over half of all key accounts are now secured by contracts for twoyears or more. Organic growth is strong and any opportunities for growth byacquisition will be fully evaluated. Overall, the Board is confident of theexpected performance of the business for the year as a whole. As previously announced, I have decided to retire as Chairman at theend of June. The Board is currently seeking a Non Executive Chairman and RichardBurrell has been appointed to fulfill this role in the interim period. The last 13 years have been an amazing journey for me. I never imagined thatfrom the birth of the Company in a barn (no parallel comparison intended!) withjust two other members of staff and five second hand cars we could grow thebusiness to the size it is today with around 1,200 staff and a fleet of over7,000 vehicles. We have had our challenges along the way and fought our battleswith three trips to the Court of Appeal and two to the House of Lords. Wesurvived and are now an accepted part of the motor insurance industryinfrastructure with a growing number of major motor insurers now starting to useour services. This year we have announced record trading profits doubling last years previoushigh. I have complete confidence that my friends on the Board and theirsupporting team can continue to take this business from strength to strength. Iwould like to conclude by thanking all of my work colleagues, past and present,for their huge contribution in making Helphire the Company it is today. Michael J SymonsExecutive Chairman14 June 2005 Finance Director's Review Turnover Turnover grew by 57% to £118.0m (2004: £75.3m) and includes a £16.4mcontribution from Albany which was acquired in October. Credit hire volumesincreased by 49% with the improvement in turnover per case attributable to theincreasing use of credit repair - the number of repair cases increased by 45%.In addition to hire and repair, other claims related income streams accountedfor 12% of turnover (2004: 12%). Since flotation, Helphire's referral base has changed significantly. In 1996,60% of cases were referred from bodyshops with the balance being provided bysmall high street brokers. The introduction of the Angel legal expense insuranceproduct in 1997 led to significant growth in the broker market. In recent years,key accounts have played an increasingly prominent role with a significant shifttowards national broker businesses and insurance companies. It is expected thatHelphire's future growth will be driven from existing and new key accounts aswell as from acquisitions. Gross Margins Gross profit for the year was £54.0m (2004: £35.1m), an increase of 54%. As apercentage, the margin has remained broadly unchanged at 46% despite asignificant change in the business mix. The enhanced contribution from the lowermargin credit repair service has been matched by the growth in other hirerelated revenue streams which generate higher returns. It is anticipated that the mix of business will remain relatively static overthe coming year, and be reflected in an unchanged gross margin. Whilstinflationary pressure on commission payments is expected to increase theacquisition cost of business, economies of scale within the direct cost base,especially in the area of fleet management will contain the cost base. Operating Margin Operating profit for the year was £14.4m (2004: £8.3m), an increase of 73%. Theprofit margin (excluding exceptional items and amortisation) has increased from11.5% in 2004 to 15.2% - demonstrating the operational gearing benefitsachievable from the business model. The acquisition of Albany has provided theGroup with additional capacity from which further operational gearing benefitsare expected in the coming year. Exceptional Items As previously announced, the sale of the Pinesgate call centre premises inFebruary 2005 generated an exceptional profit of £6.2m with an ongoing rentwhich equates to 6.5% of the sale value. The carrying values of businesses previously acquired has been reviewed, aprocess which resulted in the impairment of £1.5m of goodwill. Following theacquisition of Albany a system review and rationalisation has resulted in animpairment in the value of capitalised IT development cost by £1.0m. Financial Performance Profit before tax and amortisation have reached record levels at £18.5m (2004:£7.4m) - an increase of 151%. Excluding exceptional items, the growth in profitbefore tax and amortisation was 100% at £14.8m. Given the tax neutral position of the Group, these growth figures also reflectthe post tax performance. The Group will return to a tax paying position in thecurrent year. Debtors Outstanding claims at the year-end were valued at £71.4m (2004: £42.2m). Theincrease in debtors reflects growth in the core business as well as theacquisition of Albany. Debtor days have increased to 221 days (2004: 205 days),however if the acquisition of Albany is excluded, debtor days fell marginally to198 days. Working Capital and Cash Flow Bank borrowings and loan notes at the year end were £60.0m, which (excludingacquisition finance) have reduced from £18.9m to £13.0m. This has been primarilyachieved as a result of the sale of Pinesgate. Working capital was drawn from facilities amounting to £23.5m provided by theBank of Scotland. These facilities have been increased by a further £10m postyear-end. As at the 31 March 2005, £10.5m was drawn down under the Bank of Scotland'sfacilities. These facilities are due to expire in June 2007. In addition to the working capital facilities, the Group has loans amounting to£47.0m in relation to the acquisition of Albany. These loans are due forrepayment by October 2011. The Group's financial instruments comprised borrowings, some cash and liquidreserves and various items such as trade debtors and trade creditors which havearisen directly from operations. The main purpose of these financial instrumentsis to raise finance for the Group's operations. It is, and has been throughoutthe period under review, the Group's policy that no trading in financialinstruments is undertaken. The main risks arising from the Group's financial instruments are interest raterisk and liquidity risk. The Board reviews and agrees policies for managingrisks as summarised below. These policies have remained unchanged since 1 April2003. Interest Rate Risk The Company finances its operations from a mixture of equity and bankborrowings. The Group borrows in sterling at floating rates of interest. Nointerest rate caps or swaps are used to manage exposure to interest ratefluctuations. Liquidity Risk During the year, the Group has sought to lengthen the maturity of its bankingfacilities. At the year-end, the Group's bank borrowings were renewable aftermore than 12 months. Capital Expenditure Capital expenditure during the year amounted to £12.8m and primarily relates tovehicles. Tax Due to losses made in the year-ending 31 March 2001, the Group will not have acorporation tax liability as at 31 March 2005. Share Capital During the year, the Group's capital reserves were increased by £1.9m as aresult of the exercise of share options. The number of shares in issue at theyear-end was 118,141,802. International Accounting Standards Future published accounts will be reported with reference to InternationalAccounting Standards (IAS). The Company is undergoing an IAS review and will bein a position to report as required. David E LindsayGroup Finance Director14 June 2005 Consolidated Profit and Loss AccountFor the year ended 31 March 2005 2005 2004 Note £'000 £'000 Turnover Existing operations 101,575 75,297Acquisition 16,435 - Total turnover 2 118,010 75,297Cost of sales (64,056) (40,240)Gross profit 53,954 35,057 Administrative expenses: Exceptional goodwill impairment charge 3 (1,453) - Exceptional tangible fixed asset impairment charge 3 (1,000) - Other (39,022) (28,052) (41,475) (28,052)Other operating income 1,915 1,329 Operating profit 14,394 8,334 Operating profit analysed between:Existing operations before goodwill 11,521 8,635Amortisation of existing operations goodwill - (301)Impairment of existing operations goodwill (1,453) - Operating profit for existing operations 10,068 8,334 Acquisitions before goodwill 5,361 -Amortisation of acquisition goodwill (1,035) - Operating profit for acquisition 4,326 -Total operating profit 14,394 8,334 Exceptional profit on sale of tangible fixed assets 3 6,175 - Profit on ordinary activities before finance 20,569 8,334charges Finance charges (3,116) (1,259) Profit on ordinary activities before taxation 17,453 7,075Profit on ordinary activities before taxationanalysed between:Profit on ordinary activities before taxation and 18,488 7,376amortisation of goodwillAmortisation of goodwill (1,035) (301) 17,453 7,075 Tax (charge) / credit on profit on ordinary (212) 987activities Profit on ordinary activities after taxation 17,241 8,062 Dividends paid and proposed (7,085) (5,232)Retained profit for the year 10,156 2,830 Earnings per shareBasic 1 14.78p 6.97pDiluted 1 14.48p 6.78p All activities relate to continuing operations. There are no material recognised gains or losses other than the profit for eachyear. Accordingly a consolidated statement of total recognised gains and losseshas not been presented. Consolidated Balance SheetAt 31 March 2005 2005 2004 £'000 £'000 Fixed assetsIntangible assets 46,402 1,453Tangible assets 14,894 19,420Investments 300 - 61,596 20,873 Current assetsDebtors:- due within one year 83,290 50,911- due after one year 1,266 1,632Cash at bank and in hand 3,353 4,976 87,909 57,519 Creditors:Amounts falling due within one year (78,346) (30,207) Net current assets 9,563 27,312 Total assets less current liabilities 71,159 48,185 Creditors:Amounts falling due after more than one year (22,348) (11,387) Net assets 48,811 36,798 Capital and reservesCalled-up share capital 5,907 5,800Share premium account 23,936 22,186Profit and loss account 18,968 8,812 Equity shareholders' funds 48,811 36,798 Consolidated Cash Flow StatementFor the year ended 31 March 2005 2005 2004 Note £'000 £'000 Net cash inflow from operating activities 4 4,068 3,279Returns on investments and servicing of finance 4 (3,116) (1,259)Taxation (222) -Capital expenditure and financial investment 4 17,942 (1,938)Acquisitions and disposals 4 (29,941) -Equity dividend paid (5,613) (4,049) Cash outflow before financing (16,882) (3,967)Financing 4 15,964 4,001 (Decrease) / Increase in cash in the year 4 (918) 34 The accompanying notes are an integral part of this consolidated cash flowstatement. Notes to the Financial Statements 1 Earnings per Share The calculation of basic earnings per share is based on the profit after tax of£17.2m (2004: £8.1m) and 116,612,903 ordinary shares being the weighted averagenumber of ordinary shares in issue during the year ended 31 March 2005 (2004:115,619,376). The calculation of diluted earnings per share is based on theprofit after tax and 119,090,721 (2004: 118,914,955) potential ordinary shares. 2 Turnover The Directors consider that the activities of the Group represent a singlebusiness segment, being accident management services. However, an analysis ofturnover is given below for additional information: 2005 2004 £'000 £'000 Accident management assistance and related services, 83,323 51,846primarily vehicle hireVehicle repairs 34,687 23,451 118,010 75,297 The Group's turnover, profit before tax and net assets arose entirely within theUnited Kingdom. 3 Exceptional Items Exceptional items comprised of the following: 2005 2004 £'000 £'000 Exceptional costs:Goodwill impairment (1,453) -Tangible fixed asset impairment (1,000) - (2,453) - The exceptional costs of £2.45m represent goodwill and tangible fixed assetimpairment charges. Exceptional profit on sale oftangible fixed assets:Profit on sale of freehold property 6,175 - The exceptional profit on sale of tangible fixed assets represents the profitfrom the sale and leaseback of the Groups corporate headquarters in Bath. Theassociated tax charge on the profit amounts to £179,000. 4 Notes to the Cash Flow Statement Reconciliation of Operating Profit to Operating Cash Flows 2005 2004 £'000 £'000 Operating profit 14,394 8,334Depreciation, amortisation and impairment charges 7,489 3,388Loss / (gain) on sale of tangible fixed assets 34 (41)Increase in debtors (25,415) (7,342)Increase / (decrease) in creditors 7,566 (1,060) Net cash inflow from operating activities 4,068 3,279 Analysis of Cash Flows 2005 2004 £'000 £'000 Returns on investments and servicing of financeInterest paid (2,571) (863)Interest element of finance lease rentals (545) (396) Cash outflow (3,116) (1,259) Capital expenditure and financial investmentPurchase of tangible fixed assets (399) (2,145)Purchase of unlisted investment (300) -Sale of tangible fixed assets 862 207Sale of freehold property 17,779 - Net cash outflow 17,942 (1,938) Acquisitions and disposalsAcquisition of Albany (19,660) -Net overdraft required within subsidiary undertaking (10,281) _ Net cash outflow (29,941) - FinancingIssue of ordinary share capital (net of expenses) 1,857 983New secured loans advanced 33,447 5,153New other loans _ 1,997Repayment of mortgage (8,379) -Capital element of other loans repayment (556) (1,441)Capital element of secured loan repayment (5,386) -Capital element of finance lease rental payments (5,019) (2,691) Net cash inflow 15,964 4,001 Analysis and Reconciliation of Net Debt Other 1 Apr non-cash 31-Mar 2004 Cash flow changes 2005 £'000 £'000 £'000 £'000 Cash in hand and at bank 4,976 (1,623) - 3,353Overdrafts (4,078) 705 - (3,373) 898 (918) - (20) Debt due after one year (7,993) (12,118) - (20,111)Debt due within one year (12,328) (7,012) (17,170) (36,510)Finance leases (6,420) 5,019 (12,419) (13,820) Net debt (25,843) (15,029) (29,589) (70,461) 2005 2004 £'000 £'000 (Decrease) / Increase in cash in the year (918) 34Cash inflow from increase in debt and lease financing (14,111) (3,018) Change in net debt resulting from cash flows (15,029) (2,984)Issue of loan notes (17,170) -New finance leases (12,419) (7,265) Movement in net debt in year (44,618) (10,249)Net debt at start of year (25,843) (15,594) Net debt at end of year (70,461) (25,843) 5 Status of Audit The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 March 2005 or 2004, but is derivedfrom those accounts. Statutory accounts for 2004 have been delivered to theRegistrar of Companies and those for 2005 will be delivered following thecompany's annual general meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under s237(2) or(3) Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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