25th Sep 2007 07:03
Helphire Group PLC25 September 2007 Date 25 September 2007 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 4759/4758 Helphire Group plc Results for the year ended 30 June 2007 Helphire Group plc ("Helphire" or the "Group"), the non-fault accidentmanagement assistance and related services company, today announces its resultsfor the twelve-month period ended 30 June 2007. Highlights include: Highlights* • Hire volumes increased by 34% • Credit repair cases increased by 33% • Personal injury cases increased by 13% • Growth in turnover of 49% • Gross profit up by 42% • Growth in operating profit of 58% • Diluted EPS growth of 45% despite an increase in the effective tax charge from 19.3% to 26.6% • Final dividend of 5.8p (net) - 11.0p net in total \* The statutory comparative period is for the 15 months to 30 June 2006.Thehighlights compare audited results for the twelve-month period to 30 June 2007to the unaudited results for the twelve-month period ended 30 June 2006, becausein the opinion of the Directors this provides a more meaningful comparison.Analysis against the 15 month comparative period is given in the FinanceDirector's review. On this basis, the increases in turnover and operating profitare 25% and 35%, respectively. Commenting on the results, Chief Executive Mark Jackson said: "This has been another extremely successful year and we are confident of furtherstrong progress in the coming year." Chief Executive's Statement Overview The last 12 months have seen continuing strong growth across all of the Group'smain trading activities. The market demand for replacement vehicles for thevictims of accidents continues to grow from referrers of cases from both theinsurance and automotive industries. This period has also seen the first stepstaken in exploiting the potential for Helphire to expand into other Europeancountries, starting with Spain in October. A significant event in the expansion of the Group's Legal Services provisionalso took place after the year end with the announcement on 7 August of acommercial agreement with CS2, one of the UK's largest claimant personal injuryservices companies. Trading Results In comparing the 12 month audited accounts for the period to 30 June 2007 withunaudited financial data for the 12 months to 30 June 2006 the results are asfollows. Turnover has grown by 49% to £290.0m; hire volumes increased by 34% to148,340; the number of credit repair cases increased by 33% to 55,116 whilst thenumber of personal injury cases increased by 13% to 30,233. Profit before taxincreased by 63% to £40.3m. Operations & Infrastructure The Group's operational presence continues to expand to address the growingmarket opportunity. The Helphire and Angel Division is based in call centreaccommodation in Bath and Bristol, the Automotive Division in Northwich and theAlbany Division in Peterlee. As at 30 June 2007, the Group employed a total of2,052 people, 1,114 in Bath and Bristol, 146 in Northwich, 296 in Peterlee and496 in the branches, an increase of 18% over the last 12 months. The Group nowhas a total of 29 depots from which the fleet of over 17,000 vehicles arecollected and delivered. Development work has continued on two major business process improvementprojects supported by significant new technology systems. A new fleet management system has been introduced which has facilitated fleetacquisition and disposal planning and fulfilment. A second phase of this programintroducing fleet logistics improvements is scheduled for the next six months.This system is expected to enhance operations through more efficientlydistributing the available fleet. The first release of the new claims processing system, Project Expedite, has nowgone live and is due to have full functionality by the end of the currentfinancial year. The financial business benefit will begin to impact in the yearto 30 June 2009. Helphire continues to explore the potential of providing credit hire services inEuropean markets and early signs are encouraging. An office has now been openedin Madrid and it is anticipated that the first credit hire cases in Spain willbe processed in October 2007. Commercial agreement with CS2 Lawyers At the beginning of August, the Group announced an important development in itslegal services and claims management operations by a commercial arrangement withCS2 Lawyers Limited and the acquisition of a group of legal services businesses.This investment in the legal services market is anticipated to realisesignificant cost and revenue synergies and strengthens the position of theHelphire Group as a market leader in the motor claims management. Dividends Due to the continued strong growth of the Group, the Board will continue withthe progressive dividend previously announced. At the end of the first sixmonths of the current financial period, an interim dividend payment of 5.2p wasdeclared. I am now pleased to be able to announce that the Board is recommendinga final dividend payment of 5.8p making 11.0p (2006 annualised: 8.0p) for theyear. This dividend will be paid on 5 December 2007 to shareholders on theregister at 26 October 2007. Outlook The market for accident management services and replacement vehicle provision inthe UK continues to expand. There has been an increase in the interest in andutilisation of these services by the insurance industry in particular. Generallyincreased awareness of the services we provide and improvement in operationalprocesses by the referrers of cases are also driving increased penetration ofthe market place. The new financial year has started well with a combination of inclement weatherand new referral sources leading to a busier than normal summer period whichbodes well for the forthcoming autumn. Mark JacksonChief Executive24 September 2007 Finance Director's Review In order to achieve a meaningful comparison of data I refer to the auditedaccounts for the 12 months to 30 June 2007 as compared with the unauditedfinancial data for the 12 months to 30 June 2006. To comply with statutoryobligations I have also referred to the audited accounts for the 15 month periodto 30 June 2006. Revenue Turnover has grown by 49% to £290m (12 months to 30 June 2006: £195m). Hirevolumes increased by 11% to 148,340 (12 months to 30 June 2006 ; 110,725), afigure which includes 8,415 standard hires (12 months to 30 June 2006: 10,220)which are non credit hire services provided to insurance companies at a reducedtariff as compared with the ABI GTA rates. Credit repair cases increased by 33%to 55,116 (12 months to 30 June 2006: 41,506) whilst the number of PI casesincreased by 13% to 30,233 (12 months to 30 June 2006: 26,870). In addition tothe increased contribution per case, the change in mix of our revenue hascontributed to an overall increase in the revenue per case by 11% to £1,957 (12months to 30 June 2006: £1,765). On a statutory basis, turnover for the 12 months to 30 June 2007 was £290m (15months to 30 June 2006 : £231m). Helphire continues to benefit from the acquisition of key insurance accounts -the Group's business sourced from the automotive sector has been consolidatedwith the Swift operation as the Automotive division and enhances our focus inthis area. In June 2007 the Group signed an exclusive three year deal withPendragon Plc - the largest car dealership group in Europe. Referrals areexpected to build from a low base to a level comparable to other major keyaccounts deriving significant benefits to both parties. In August 2007 the Group announced an investment in, and strategic alliancewith, CS2 - a legal firm based in Chesterfield. CS2 will enable the Group toexpand its activities within the PI marketplace and improve margins throughefficiencies. Gross margins Gross profit grew by 42% to £115m (12 months to 30 June 2006: £81m). As apercentage the margin has reduced from 42% to 40%. Whilst the credit hire and PImargins have been suppressed by increasing referral commissions, this has beencountered somewhat by the increase in tariff and savings made on fleet costs.The margin has also been adversely affected by the slower growth in PI cases ascompared with hire and repair, as some new sources of business have not includedpersonal injury management. However, the arrangement with CS2 should improve PIcontribution going forward. Statutory gross profit was £115m (15 months to 30 June 2006 : £97m). Looking ahead to the current financial year the Board expects the consolidatedgross margin to be maintained around current levels. Operating margin The operating margin increased from 14.6% to 15.6%, whilst the adjustedoperating profit margin increased from 16.0% to 17.2%. Further expansion isexpected in the current financial year, however a more significant improvementcan be expected in the year to 30 June 2009 during which significant benefitsfrom the Group's new IT platform are likely. Statutory operating profit was £45.2m (15 months to 30 June 2006 : £33.4m). Financial performance Profit before tax increased by 63% to £40.3m (12 months to 30 June 2006:£24.7m). Adjusted* profit before tax increased by 55% to £45m (12 months to 30June 2006: £29m). Statutory profit before tax was £40.3m (15 months to 30 June 2006 : £28.4m). Debtors, working capital and cash flow Outstanding claims at 30 June 2007 stood at £174m (2006: £112m). Calculated on astandard basis, this represents debtor days of 219 (2006: 206). Debtor days on acountback basis were 215 (2006: 214), which takes account of fluctuation inbusiness volumes. The weighted average age of claims has improved by 8% and asurplus of £0.3m in free cash flow (being the net cash flow from operating andinvesting activities (excluding acquisitions) less finance lease principalrepayments) has been generated compared with a consumption in the year to June2006 of £9.5m. Net cash flow from operating activities was £11.8m (15 months to30 June 2006 : £7.7m). Fleet Over the past three years the Group has increased the proportion of "owned"vehicles on its rental fleet to benefit from lower holding costs. By owning asopposed to leasing, the Group saves the margin charged by leasing companies andbenefits from the purchasing power associated with a fleet of around 17,000vehicles with an average holding period of twelve months. Helphire's fleetmirrors the 'car park' of vehicles on the road and the consequent diversity ofthe fleet supports high residual values on resale. 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. A hedging strategy isunder consideration to cover the risk associated with rising interest rates oncore debt funding. Liquidity risk On 31 July 2007, the Group entered into a new banking arrangement. A syndicateof banks comprising HBOS and RBS now provide combined facilities of £150m whichmature after more than twelve months. £60m is earmarked for working capital(excluding vehicle purchases); £40m relates to the funding of past acquisitionsand a further £50m has been set aside for unspecified acquisitions. The Groupalso has separate facilities in place to fund fleet acquisitions. Critical judgements As detailed in the accounts, the Directors have made critical judgements inrelation to expected future adjustments of claims against motor insurers;depreciation of the rental fleet and the capitalisation and amortisation of ITdevelopment costs. By their very nature, these areas are inherentlyjudgemental. Capital expenditure Capital expenditure during the year amounted to £146m, with £132m representingthe spend on vehicles; and £14m on a new call centre in Northwich, leaseholdimprovements, fixtures and fittings and investment in new technology. Tax The effective tax charge has risen from 19% to 27% but is lower that theexpected rate of 30% noted in my report last year. This benefit has resultedfrom re-assessment of certain estimates made in prior years. Whilst the Group has incurred an increasing tax charge over the past two yearsas tax losses have been utilised, the cash burden has been limited byaccelerated capital allowances associated with our expanding fleet of vehicles. Earnings per share The diluted basic earnings per share increased by 45% to 21.04p (12 months to 30June 2006 : 14.49p). The statutory diluted basic earnings per share increased by 22% to 21.04p (15months to June 2006: 17.27p). These figures were distorted by certain items asadjusted* below and an increasing tax charge resulting from the diminishingbenefit of losses brought forward. As explained above, the tax charge has risenfrom an effective rate of 19% to 27% for the respective periods. On an adjusted*basis and applying a tax charge of 27% in both periods diluted earnings pershare rose by 56% to 23.67p (12 months to 30 June 2006: 15.20p). Share capital and reserves During the year the Group's reserves were increased by £21m. Pro forma information (unaudited) 12 Months to 30 June 12 Months to 30 June Change 2007 (audited) 2006 (unaudited) £ million £ million %Revenue 290.3 195.4 49%Gross profit 115.2 81.4 42%Gross margin (%) 40% 42%Adjusted* operating profit 50.0 31.9 57%Adjusted* operating margin (%) 17% 16%Operating profit 45.2 28.6 58%Amortisation (2.3) (2.3) -Costs / income adjusted* (2.4) (1.0) (140%)Profit before tax 40.3 24.7 63%Profit after tax 29.5 19.2 54%Diluted basic EPS 21.04p 14.49p 45%Adjusted* EPS diluted applying tax chargeof 27% in both years (p) 23.67p 15.20p 56%Hire volumes (no.) 148,340 110,725 34%Repair volumes (no.) 55,116 41,506 33%PI volumes (no.) 30,233 26,870 13% The unaudited results for the 12 months ended 30 June 2006 are actual resultsextracted from the management accounts. * Adjusted financial information in the current period excludes the impact ofamortisation of intangible assets, impairment of intangible assets, abortiveacquisition costs and share-based payment charge. The comparative figures to 30June 2006 exclude the impact of amortisation of intangible assets, share-basedpayment charge and Albany claims. These items are shown separately in the incomestatement. Consolidated Income StatementFor the year ended 30 June 2007 Note Year ended 15 months 30 June ended 2007 30 June 2006Continuing operations £'000 £'000 Revenue 290,318 231,387 Cost of sales (175,118) (133,903) Gross profit 115,200 97,484 Administrative expenses:Abortive acquisition costs (766) -Amortisation of intangible assets (2,296) (2,870)Impairment of intangible assets (406) -Share-based payment charge (1,275) (722)Albany claims - (578)Other (69,107) (63,351) (73,850) (67,521)Other operating income 3,889 3,452 Operating profit 45,239 33,415Finance costs (4,975) (5,048) Profit before tax 40,264 28,367Tax on profit on ordinary activities (10,727) (5,484) Profit for the period 29,537 22,883 Earnings per shareBasic 1 21.55p 17.67p Diluted 1 21.04p 17.27p Adjusted earnings per shareBasic 1 24.25p 19.90pDiluted 1 23.67p 19.45p Consolidated statement of changes in equityFor the year ended 30 June 2007 Share Share Premium Equity Retained capital account Reserve earnings Total £'000 £'000 £'000 £'000 £'000 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 based incentive plan - - 2,276 - 2,276 Dividend paid - - - (12,520) (12,520) Balance at 30 June 2006 6,799 66,106 4,583 33,345 110,833 Profit for the year - - - 29,537 29,537 Issue of new ordinary shares 111 2,558 - - 2,669 Share based incentive plans - - 1,275 - 1,275 Deferred tax - share based incentive plan - - (1,424) - (1,424) Current tax - share based incentive plan - - 1,772 - 1,772 Dividend paid - - - (12,622) (12,622) Balance at 30 June 2007 6,910 68,664 6,206 50,260 132,040 Consolidated Balance SheetAs at 30 June 2007 2007 2006 £'000 £'000 Non-current assetsGoodwill 67,052 67,052Intangible assets 7,502 6,259Property, plant and equipment 144,109 50,702(including vehicles)Investments 300 300Deferred tax asset 2,054 6,733Other receivables 2,023 - 223,040 131,046 Current assets Trade and other receivables 191,494 125,938Tax receivable 432 -Cash and cash equivalents 4,895 8,758 196,821 134,696 Total assets 419,861 265,742 Current liabilitiesTrade and other payables (52,865) (37,928)Tax liabilities - (3,076)Obligations under finance leases (126,237) (37,230)Short-term borrowings and overdrafts (47,221) (48,966) (226,323) (127,200) Net current (liabilities) / assets (29,502) 7,496 Non-current liabilities Long term borrowings and overdrafts (33,498) (15,487)Deferred tax liability (7,394) (2,467)Obligations under finance leases (20,606) (9,755) (61,498) (27,709)Total liabilities (287,821) (154,909)Net Assets 132,040 110,833 Equity Share capital 6,910 6,799Share premium account 68,664 66,106Equity reserve 6,206 4,583Retained earnings 50,260 33,345Total equity 132,040 110,833 Consolidated Cash Flow Statementfor the year ended 30 June 2007 15 months Year ended ended 30 30 June 2007 June 2006 £'000 £'000 £'000 £'000 Cash flows from operating activitiesOperating profit 45,239 33,415Depreciation, amortisation and impairment charges 23,352 14,485Gains on sale of tangible fixed assets (440) 4Share based payment charge 1,275 722Increase in debtors (67,541) (39,360)Increase in creditors 19,014 5,851Cash generated from operations 20,899 15,117 Bank and loan interest paid (4,438) (4,511) Interest element of finance lease rentals (537) (537) (4,975) (5,048) Taxation paid (4,094) (2,322)Net cash flow from operating activities 11,830 7,747 Cash flows from investing activities Purchase of property, plant and equipment (2,161) (6,071) Purchase of other intangible assets (3,945) (2,586) Proceeds from sale of plant and equipment 32,137 14,717 Acquisitions - (17,574) Cash and cash equivalents acquired - 395 Net cash flow from investing activities 26,031 (11,119) Cash flows from financing activities Net proceeds from issue of ordinary share capital 2,444 39,837 Net proceeds from issue of new loans 16,444 - Repayment of borrowings (25,599) (19,372) Finance lease principal repayments (37,536) (23,270) Dividends paid to shareholders (16,701) (8,441) Net cash flow from financing activities (60,948) (11,246)Net decrease in cash and cash equivalents (23,087) (14,618) Cash and cash equivalents at beginning of period (14,423) 195Cash and cash equivalents at end of period (37,510) (14,423) Cash and cash equivalents consists of:Cash at bank and in hand 4,459 4,736Cash held in restricted deposit 436 4,022Bank overdraft (42,405) (23,181) (37,510) (14,423) Notes to the Financial Information 1 Earnings per Share The calculation of the basic and diluted earnings per share is based on thefollowing data: Year ended 30 15 months ended June 2007 30 June 2006Earnings £'000 £'000 Earnings for the purposes of basic and diluted earnings per share being 29,537 22,883net profit attributable to equity holders Number of shares Number Number 137,079,912 129,523,905 Weighted average number of ordinary shares for the purposesof basic earnings per shareEffect of dilutive potential ordinary shares - share options 2,549,480 2,987,986Effect of dilutive potential ordinary shares - other share 774,371 -plansWeighted average number of ordinary shares for the purposes 140,403,763 132,511,891of diluted earnings per share Adjusted earnings per share Adjusted earnings per share is based on the weighted average number of shares asfor the unadjusted earnings per share and the profit for the period adjusted forthe following expenses: Year ended 30 15 months ended June 2007 30 June 2006 £'000 £'000 Amortisation of intangible assets 2,296 2,870 Impairment of intangible assets 406 - Aborted acquisition costs 766 - Albany claims cost - 578 Share-based payment charge 1,275 722Adjustment to profit before tax 4,743 4,170Tax credits attributable to the above expenses (1,040) (1,277) 3,703 2,893 2 Segmental Information The financial statements are in respect of the Group's sole business segment ofnon-fault accident services, conducted wholly in the United Kingdom. HelphireSpain SL did not trade in the period under review. 3 Status of Audit The financial information set out above does not constitute the company'sstatutory accounts for the year ended 30 June 2007 or the 15 months to 30 June2006, but is derived from those accounts. Statutory accounts for the 15 monthsto 30 June 2006 have been delivered to the Registrar of Companies and those forthe year ended 30 June 2007 will be delivered following the company's annualgeneral meeting. The auditors have reported on those accounts; their reportswere unqualified and did not contain statements under s. 237(2) or (3) CompaniesAct 1985. 4 Basis of Preparation While the financial information included in this preliminary announcement hasbeen prepared in accordance with the recognition and measurement criteria ofInternational Financial Reporting Standards (IFRSs), this announcement does notitself contain sufficient information to comply with IFRSs. The company expectsto publish full financial statements that comply with IFRSs later in September2007. The accounting policies applied in this preliminary announcement are consistentwith those in the full 30 June 2007 financial statements which have yet to bepublished. There are no changes in accounting policy from the 30 June 2006financial statements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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