TIDMACS
RNS Number : 9460O
AI Claims Solutions PLC
27 September 2011
Ai CLAIMS SOLUTIONS PLC
Preliminary Results for year ending 30 June 2011
Group Financial Summary & Highlights
2010/11 2009/10
GBP'000 GBP'000 Change
Revenue 117,621 91,929 +28%
Gross margin 18.5% 18.1%
Adjusted profit(1) 3,811 2,722 +40%
Profit before taxation 3,737 2,630 +42%
Taxation (1,084) (708) +53%
Profit for the period 2,653 1,922 +38%
Dividends (428) (385) +11%
Earnings per share:
- Adjusted basic(1) 4.46p 3.29p +36%
- Basic 4.34p 3.14p +38%
Dividend per share 0.75p 0.66p +14%
Financial Highlights
- Revenue increased by 28% to GBP117.6m from GBP91.9m
- 40% increase in adjusted profits(1) to GBP3.8m (2009/10:
GBP2.7m)
- Earnings(2) before interest, taxation, depreciation and
amortisation (EBITDA) up 38% to GBP5.8m (2009/10: GBP4.2m)
- Gross margin of 18.5% (2009/10: 18.1%)
- Adjusted profit(1) margin of 3.2% (2009/10: 3.0%)
- 2.7 percentage points increase in return(2) on shareholders'
funds to 15.7% (2009/10: 13.0%)
- Proposed final dividend of 0.42p per share (2009/10: 0.37p per
share)
- Interim & final dividend in respect of 2010/11 is
increased at 0.75p per share (2009/10: 0.66p per share)
Operational Highlights
- Successful implementation of a major broker based scheme which
commenced on 1 July 2010
- Retained the business of three vehicle manufacturer clients
and three other referral providers
- Settlement reached with a major insurer to settle GBP4.9m of
GTA(3) debt due with no diminution to the carrying value of the
debt. Forward payment protocol also entered into with this
insurer
- Work-in-Progress ('WiP') days reduced by 17 days to 22 days
(30 June 10: 39 days) as a result of process improvements
- Non GTA(3) debtor days reduced by 11 days to 41 days (30 June
10: 52 days). GTA(3) debtor days increased by 22 days to 145 days
(30 June 10: 123 days)
- Strengthened commercial repair terms with the Ai Repair (AIR)
network and introduced an effective fast-track repair solution
- Ai's First Notification Of Loss ('FNOL') technology
shortlisted for three awards
- Developing Ai's full outsourced claims handling capabilities
for (both brokers and insurers) for launch in 2011/12 for a pilot
and a new scheme
- Secured the 'Investors In People' Silver Award
(1) Adjusted profit represents profit before taxation excluding
IFRS2 share option charges
(2) Based on profit for the period excluding IFRS share option
charges
(3) The Association of British Insurers' (ABI) General Tariff
Agreement
For further information, please contact:
David Sandhu Ai Claims Solutions plc 0844 571
3108
Peter Harrison Ai Claims Solutions plc 0844 571
3200
Dru Danford Shore Capital & Corporate 0207 408
Stephane Auton Ltd (NOMAD to the Company) 4090
Chairman's Statement
I am pleased to report that, while the market has become tougher
in the second half, it has been another record year for Ai. The
Group has delivered a profit before taxation (and before IFRS2
charges) of GBP3.8m for the year ending 30 June 2011, in line with
management's expectations. The key highlights are:
-- Further revenue growth by 28% to GBP117.6m (2009/10:
GBP91.9m)
-- Record adjusted profits up 40% to GBP3.8m (2009/10: GBP2.7m)
with EBITDA level profits 38% higher at GBP5.8m (2009/10:
GBP4.2m)
-- Adjusted basic earnings per share up 36%
-- Strong start to the year due to a new broker referred
contract followed by a challenging second half due to the market
wide fall off in accident frequencies
-- Settlement with a major insurer (covering 9% of Ai's GTA
debt) with no diminution of its carrying value and the
implementation of a payment protocol arrangement for future
claims
Market Background
Ai positions itself as the leading 'ethical' motor claims
solution provider. We continue to focus on satisfying the needs of
claimants as quickly, efficiently, and cost effectively as possible
in order to facilitate timely claims payment by insurers and
minimise their claims settlement uncertainty. The foundations for
delivering such a service are our experienced and talented people
and our technologically advanced workflow software. The latter
incorporates Ai's automated decision making functionality which has
significantly improved the speed and accuracy of our liability
decisions.
After a record start to the year, referrals fell in the second
half of the year by 15-20% as a result of a market wide fall in
accident frequencies. The industry has also received a lot of bad
publicity by being implicated in the public discussions around
claims inflation, in particular referral fees on personal injury
(PI) cases. Ai is well placed in this regard as our business model
places minimal reliance on PI referral fees and does not sell any
personal data.
There is some uncertainty around when, or if, the accident
frequency rate will recover. In our plans for the next few years,
we have taken a prudent view on when this will happen so, as well
as continuing to explore growth opportunities, we are reviewing all
our processes to ensure we have the basics right for our customers
and our people and to realise further shareholder value.
Results
Record revenue of GBP117.6m has been reported this year which
represents an uplift of 28% on last year. The new broker schemes
(one starting in the second half of 2009/10 and the other at the
start of this year) have largely contributed to this but their
impact has been partially offset by the fall in referrals in the
second half of this year.
These new schemes have strengthened Ai's presence in the credit
hire market with services provided on credit hire and repair cases
increasing by 17% to 96,000 (2009/10: 82,000). Gross margin of
GBP21.7m was 30% higher than last year (2009/10: GBP16.7m), driven
largely by volume improvements (20% more core services provided)
and also, to a lesser extent, by margin improvements on both Ai's
hire (0.5 percentage points higher this year at 19.5%) and repair
services (2.1 percentage points higher at 11.8%).
We continue to place significant management focus on improving
our level of work in progress ('WiP') and trade debtors.
During the year, we achieved a settlement with one major insurer
of all their outstanding debt (equivalent to 9% of Ai's GTA debt at
the time). This settlement was achieved with no diminution in the
carrying value of the debt and provides significant assurance that
Ai's revenue recognition and provisioning policies are robust and
realistic.
We have also entered into a forward protocol arrangement with
this insurer. This establishes a contractual relationship, as
opposed to an adversarial one, with the insurer whereby claims made
by Ai for hires provided to non-fault parties (where the at-fault
party is insured by this major insurer) are charged at a fixed
protocol amount. Agreed settlement terms apply to this debt.
In the first year of this arrangement, we expect to be close to
a break-even position, i.e. where the amounts billed under the
protocol arrangement in the first year are in line with the amounts
that could have been billed to this insurer under the GTA.
Debtor days with this insurer prior to the block settlement and
establishment of the protocol arrangement were 233 days and are now
57days - a 176 day (76%) improvement. We are in discussions with
several other insurers to develop similar arrangements and also
exploring other methods of expediting settlement of our claims.
Our billing processes have also been improved and this is
demonstrated by the 17 day reduction in WiP days to 22 days (30
June 10: 39 days). Non-GTA debtor days have also improved - by 11
days to 41 days (30 June 10: 52 days). Continued slow payment by
insurers has contributed to the 22 days increase in GTA debtor days
to 145 days (30 June 10: 123 days).
Strategy
Our core values of Service, Innovation and Ethics are as
important to Ai today as they have ever been. Our conversion levels
are up 14 percentage points to 88%. We are looking to expand into
new markets (such as full claims outsourcing) to diversify our
portfolio by capitalising on our claims handling expertise. Given
the wider regulatory pressure to reduce premiums and thereby claims
costs there are opportunities for our cost saving intervention
product, Reserva, which would have added benefit to Ai given its
less intensive working capital requirements. Our low hire durations
support our ethical focus and continue to be well below the
industry average. We have also, this year, invested in systems and
processes specifically to ensure that we continue to benefit our
customers by shortening downtime and reducing costs at every
stage.
In addition, through strategic partnering with major car rental
providers, Ai's customers have access to over 300,000 vehicles from
an extensive national network.
Board
Following the expiry of my initial two year incentivisation
arrangement (under which I took no fees but was remunerated solely
by a share incentive scheme based upon an increase in the share
price over the period to 2010), I was reappointed Chairman under a
new agreement which reflected my continued confidence in the
Group's ability to create value for shareholders. Under this
agreement, part of my remuneration is based on the appreciation of
the Company's shares from a base figure of 20.0p (but only if the
Company's share price exceeds 35.0p for a specified period during
the vesting period) under an unapproved share option agreement.
Bob Newton, who joined the Board in 2008 as Non-executive
director, has indicated that he does not wish to seek re-election
at the forthcoming Annual General Meeting (AGM), owing to the
pressures of his other business commitments. I would like to thank
Bob on behalf of the Board for his significant contribution to the
Company.
Future Prospects & Dividends
Three manufacturer schemes have recently been renewed and Ai is
also undertaking two ventures in the full claims outsourcing arena:
a pilot scheme with a broker and a full claims handling service to
an insurer. We expect additional growth opportunities to continue
to become available but also value the strong relationships that we
have with our current referral partners and will continue to invest
our time, expertise and commitment into those relationships to
ensure that their requirements are put at the very heart of
everything we do. In addition we are re-examining all our processes
with a view to improving the bottom line through additional cost
savings.
The Board is recommending a final dividend of 0.42 pence per
share, making a full year dividend of 0.75 pence, an increase of
14.0% over the previous year. This dividend is covered 6 times by
the profit for the period. Subject to approval at the AGM, the
dividend will be paid on 11 January 2012 to shareholders on the
register at 9 December 2011.
It is a tough trading environment, with lower accident
frequencies, mounting government and press scrutiny of the
industry, insurer frustration and ongoing economic uncertainty and
this will continue to challenge the business. I am, however,
confident that Ai, with its unique and flexible operating model and
its experienced management team, will be able to continue on its
path in a solid, resilient manner. As well as further growth
potential, there are also opportunities to identify and realise
efficiencies in processes and costs by maintaining its strong focus
on margin and costs. It is through the commitment and endeavour of
our people that this solid set of results has been achieved in such
testing times so I would like to say a personal thank you to all of
them.
Steve Broughton
Chairman
26 September 2011
Operating & Financial Review
We are ethical, proactive and transparent in our service
delivery providing market leading customer service with an ethos to
control claims cost inflation. We continue to put our customers at
the very heart of everything that we do, ensuring swift resolutions
and maintaining consistently high service levels; we work hard to
contain and minimise costs for our clients.
Business and Commercial Development
Ai has steadily built up long term strategic partnerships with
certain key vehicle rental providers which gives access to over
300,000 vehicles to its customers whilst allowing its teams to
focus on controlling what they should be controlling - claims and
cost.
The business continues to benefit from its bespoke claims
administration and recovery system (CARS). This was built in house
using technologically advanced workflow software and has allowed
the business to build from this strong, scalable platform. The
system continues to be developed to enable creation of innovative
solutions and to facilitate new business opportunities. It allows
our staff to provide services quickly and efficiently, returning
customers to normality as soon as possible thereby keeping claims
costs under control.
To capitalise on its expertise in the claims handling arena to
exploit opportunities in new markets, Ai has also begun to develop
its full claims outsourcing capabilities for launch in the latter
part of 2011 for a new pilot scheme for a broker and also a new
scheme for an insurer.
Ai has successfully implemented a significant non-fault broker
referred scheme which commenced at the start of the financial year
and has expanded its presence in this sector. In addition, Ai has
retained the business of three vehicle manufacturers and continues
to work with others to develop their branded accident management
schemes. We also continue to develop relationships and products
with car dealer groups in order to increase Ai's penetration in
that sector.
Following agreement of a bulk settlement arrangement with a
major insurer in the second half of the year, Ai took the proactive
steps to establish a payment protocol arrangement with that insurer
in order to provide more assurance over cash collection. Other
insurers have also showed interest in such an arrangement and so
these are currently being explored. Whilst providing efficiencies
in our collection process, such arrangements bring new risks to
Ai's business model so we are developing our systems, processes and
MI to ensure such arrangements deliver their intended benefits.
People
Our headcount grew to an average of 471, from 375 in the
previous year, a 26% increase. This reflects our underlying
business growth and is largely driven by the two significant
non-fault broker referred schemes that have recently been
implemented - one at the end of the last financial year and one at
the start of this one. Attrition rates have been maintained at a
similar level to the prior year - 25% (2009/10: 23%).
We continue to recruit, train and retain the best people in the
industry. Ai has enjoyed 'Investor In People' status since 2003
and, in November 2010, we were awarded their silver status. We
constantly monitor and review staffing levels to ensure our
customers receive an excellent standard of service and we continue
to provide significant investment in training to improve staff
skills. Our call centre won Best Contact Centre in the Call North
West 2010 awards and Ai have been shortlisted three times in the
Call North West 2011 awards.
Principal Risks and Uncertainties
Risk is an accepted part of doing business and has the potential
to impact financial performance or hinder the achievement of
business objectives. If we do not manage these risks effectively we
could miss potential opportunities to further develop and expand
our business. A successful risk management process balances risks
and rewards and relies on a sound judgement of their likelihood and
consequences. The Board has overall responsibility for risk
management and internal control within the context of achieving the
Group's objectives. The key risks faced by the Group and relevant
mitigating factors are set out on the following page.
Impact Mitigation
Customers and reduction The Group services The Group operates
in demand motor claims. Economic with a highly variable
and environmental cost base with no
factors may impact fixed investment
on the number of being required for
vehicles on the a vehicle fleet
road and their accident infra-structure
frequency, which or a repair garage
may impact revenues infra-structure.
and profitability. Volumes are monitored
closely to understand
any shortfall against
expectations.
Bought in costs The cost of bought The Group contracts
in managing a claim in supplies has with suppliers,
a direct effect principally hire
on gross margins. companies and repairers.
The company seeks
to match its revenue
and cost exposure
and secures rental
rates over a 2-3
year period.
Competition The Group operates The Group seeks
in a competitive to develop long
sector. term relationships
with customers and
protect these with
contracts and the
development of innovative
products.
The Group also reviews
the performance
of its accounts
to ensure it remains
competitive. Financial
and operational
barriers to entry
exist to develop
a significant market
presence.
Access to capital The Group requires Bank covenants are
capital to fund working modelled and stress
capital and to support tested against the
the investment in Group's business
infra-structure. In plan. Covenants
order to continue to are reviewed on
access its credit a monthly basis
facilities, the Group to ensure ongoing
needs to remain compliance. If there
compliant with its bank was a shortfall
covenants. Bank in cash generated
facilities consist of a from operations,
property loan and the Group would
overdraft. They are reduce its capital
reviewed each year and requirement.
will next be reviewed at
the end of 30 September
2012. Failure to remain
within covenants or
extend bank facilities
beyond 30 September 2012
could potentially
materially affect the
prospects of the Group.
Interest rate risk The Group borrows When pricing for
to principally fund contracts, headroom
its working capital is built into funding
needs. Interest rate estimates.
rates are at a low The Group has hedged
level currently part of its exposure
and the Group's to significant increases
profitability would in rates.
be affected by an
increase in interest
rates.
Settlement estimation The realisable values The Group makes
of claims of credit hire and an initial estimate
repair claims can of receivable amounts
be subject to dispute, based on relevant
which may result experience and settlement
in a loss to the trends. This initial
Group. estimate is reviewed
throughout the life-cycle
of the claim to
ensure the carrying
value of debt is
appropriate.
Credit risk Credit risk arises Debts are due from
if a party paying insurance companies.
the Group's debt The capitalisation
was unable to meet of insurers is regulated
its obligations. by the Financial
Services Authority.
The financial services
industry operates
a compensation scheme
to alleviate the
impact of the failure
of an insurance
company.
Maintenance and The GTA is a voluntary The Group takes an active
compliance with code of conduct part in the GTA
the GTA between companies development and compliance
providing credit and maintains positive and
hire and repair productive relationships
services, and insurance with insurance companies.
companies. Vehicle Internal controls support
rates and terms the Group's compliance
of payment are covered with the GTA.
in this code.
IT systems The Group's business The Group seeks to
involves a high minimise the risk of
volume of transactions, business interruption
supported by diligent through controls over
and detailed case change and operating an
notes. Reliance effective IT general
is placed on the control environment.
availability and Reviews are carried out by
proper functioning Internal Audit and
of IT systems for external consultants as
the effective running appropriate. Additionally
of the operation. the Group has a disaster
Any interruption recovery plan.
would have a material
impact on the business.
Key Performance Indicators
Indicator Performance Target
ROCE - Equity 16% (2009/10: 13%) . ROCE > 15%
In a capital intensive is maximised through a
business, post tax combination of managing
return on capital net margin and working
is a more important capital requirement
measure of performance within banking facilities
than profitability and a sustainable gearing
alone. level.
EPS 4.34p (2009/10: The target is to
Basic EPS is a key 3.14p) maximise shareholder
short term measure value by increasing
of performance used EPS in the short
by shareholders. term alongside ROCE
- Equity.
Referrals 130,000. This represents To best utilise
Key driver of growth, a 2% decrease on the skills of our
business mix and the previous year experienced staff
capital requirement. (2009/10: 132,000). and IT platform,
(excludes accident the target is to
damage and courtesy maximise opportunities
car schemes) for converting leads.
Conversion into 88%. A 14 percentage > 80%
service points increase
Key customer service compared to last
indicator and revenue year (2009/10: 74%).
generator. (excludes accident
damage and courtesy
car schemes)
Customer service 84% (2009/10: 83%). Where > 85%
index Ai's service has been
Key measure of overall rated as 'Very Good' or
customer satisfaction. 'Excellent'.
Claims recovery 100% (30 June 10: > 100%
ultimate 100%)
Estimated ultimate
recovery is a key
driver in a longer
cash cycle business
for converting initially
reported revenue
into cash.
WiP days 22 days (30 June < 45 days
A key controllable 10: 39 days)
working capital
investment driver.
Debtor days - GTA 145 days (30 June < 90 days
Not fully controllable 10: 123 days)
as dependent upon
insurers payment
efficiency in a
claimant situation.
Debtor days - other 41 days (30 June < 60 days
More controllable 10: 52 days)
as debt should be
payable within agreed
payment terms.
Hire duration 18 days (2009/10: < 18 days
Key customer service 17 days)
indicator and indicator
of control of cases.
Operational Performance
The majority of referrals continue to come from insurance
companies - twelve of the top twenty motor insurers are served by
Ai - but to expand Ai's distribution platform, our commercial teams
continue to put more emphasis on building relationships with
insurance brokers, car body shops, car manufacturers, fleet
operators and affinity scheme partners. Broker referrals doubled
this year and now represent 30% (2009/10: 15%) of all
referrals.
131,000 referrals (excluding accident damage and courtesy car
schemes) were received by the business - in line with the prior
year (2009/10: 132,000 cases). The additional referrals received
from the two new broker referred scheme were offset by the drop in
accident frequencies in the second half of the year. The latter was
caused by the spike in petrol prices earlier this year which, when
combined with the general economic climate we are currently
experiencing, has had an significant impact upon driving habits,
miles travelled and average speed.
Although referrals were level, core services provided (hire,
repair and other service fees) increased by 20% on last year to
116,000 cases (2009/10: 97,000) as Ai significantly improved its
conversion rate this financial year by 14 percentage points to 88%
(2009/10: 74%).
Ai continues to report below-average hire durations. However,
due to the mix of referrals received from the two new broker
schemes, Ai's average hire period on credit hire during the year
increased by 1 day to 18 days (2009/10: 17 days) which is still
well below the industry average of 22 days. This, together with
Ai's policy to avoid, wherever possible,costly litigation to secure
payment of claims by insurers reinforces Ai's ethical stance on
claims management - key differentiators between Ai and its
competitors, who generally view hire periods as a source of revenue
and profit. Although our GTA debtor days increased from 123 days to
145 days, this continues to reflect payment backlogs witnessed at
most insurers. Our non-GTA debtor days fell by 11 days to 41 days.
Debt collection performance continues to be a key focus of senior
management and is significantly better than most credit hire
organisations.
We are making progress in our engagement with insurers to ensure
they have sufficient resources to deal with our claims and this is
bringing tangible results. During the year, we agreed terms with a
top insurer to bring their account up to date (at no diminution to
the value of Ai's debt) and to enter into a fixed protocol
arrangement. Similar discussions continue to be held with other
companies.
Financial Review
Revenue was GBP117.6m (2009/10: GBP91.9m) and this represented
an increase of 28% over the previous year.
Hire revenue from cases increased by GBP16.9m (29%) to GBP76.0m
(2009/10: GBP59.1m) and repair revenue increased by GBP9.3m (31%)
to GBP38.9m (2009/10: GBP29.6m). PI related revenue decreased by
GBP0.3m (35%) to GBP1.0m (2009/10: GBP1.3m). Service only based
income reduced by GBP0.1m (5%) to GBP1.8m (2009/10: GBP1.9m).
Hire and repair income represents 65% (2009/10: 64%) and 33%
(2009/10: 32%) of revenue respectively. Overall revenue growth has
been achieved with an uplift in gross margin to 18.5% (2009/10:
18.1%).
Full time employees increased by 28% this year to accommodate
the higher activity at the start of the year. Staff costs saw a
similar increase - they were 29% up on last year. Administrative
expenses increased by GBP3.5m (26%) to GBP17.1m (2009/10:
GBP13.6m). Operating margin (based on EBITDA) increased by 0.3
percentage points from 4.6% to 4.9%. EBITDA profit per employee
increased by 8% to GBP12,100 (2009/10: GBP11,200).
The Group generated a pre-tax profit of GBP3.7m in the year
(2009/10: GBP2.6m). Adjusted profits were GBP3.8m (2009/10:
GBP2.7m).
Despite the slow settlement of debts in this sector, Ai's
experience shows that it recovers the amounts it initially
recognises in its financial statements when it bills insurers. It
has a proven model, underpinned by its technologically advanced
workflow software, which involves the continued monitoring of trade
debtors, developing market relationships, actively managing its
claims process and adopting a prudent revenue recognition policy.
101% (30 June 10: 100%) of income initially recognised prior to 30
June 2008 has been collected to date, 97% (30 June 10: 93%) of all
income initially recognised prior to 30 June 2009 has been settled,
93% (30 June 10: 83%) of all income initially recognised prior to
30 June 2010 has been settled and, as this data continues to
mature, we expect to recover the remaining 3% and 7% respectively
in due course.
Financing
Financial expenses increased by 89% to GBP0.8m as a result of
additional working capital to fund the growth in revenue with the
increased mix of credit hire. Financial expenses are covered 6
times by operating profit (2009/10: 7 times).
Taxation
The effective tax rate was 29% (2009/10: 27%) which is higher
than the applicable standard rate of corporation tax of 28% as
depreciation is in excess of capital allowances and there are
number of permanent differences.
Earnings Per Share
Basic EPS increased by 1.20p to 4.34p (2009/10: 3.14p). Adjusted
basic EPS, which measures EPS before the IFRS 2 share option
charge, increased by 1.17p to 4.46p (2009/10: 3.29p).
Dividends
The dividend charge of GBP428,000 relates to the payment of a
final dividend in respect of the year ended 30 June 2010 of 0.37p
per share (GBP227,000) together with the payment of an interim
dividend in respect of this financial year of 0.33p per share
(GBP202,000). The Board have proposed the payment of a final
dividend for the year of GBP256,000 (0.42p per share) payable on 11
January 2012 to shareholders on the register at 9 December 2011.
The total dividend in respect of the financial year ended 30 June
2011 of GBP458,000 is covered 6 times by the profit for the
period.
Balance Sheet
Return on shareholders' funds, post tax, was 16% (2009/10: 13%).
Total assets less total liabilities at 30 June 2011 were GBP18.5m
(30 June 10: GBP16.3m), equivalent to 30.3p per share (30 June 10:
26.5p per share).
Intangible assets increased by GBP0.4m to GBP3.9m during the
year, largely in respect of new MI systems developed internally
less amortisation. A further GBP0.3m was invested in property,
plant and equipment, primarily computer equipment.
Net debt increased by GBP3.0m from GBP19.4m to GBP22.4m due to
new business growth and slow settlement by insurers. Whilst there
has again been an extension to debtor days, this has been mitigated
by a further reduction in WiP days from 39 days to 22 days. The net
overdraft of GBP21.2m remains comfortably within the facility of
GBP30.0m.
Cash Flow
Net cash outflow from operating activities was GBP1.4m (2009/10:
GBP8.1m) which was largely driven by an increase in GTA debtor days
from 123 days to 145 days.
Capital Structure and Financing
Gearing at 30 June 2011 was 121% (30 June 10: 119%) as the
business has maintained the utilisation of its working capital
funding in line with last year.
The financing arrangements with Yorkshire Bank provide the
business with a committed secured overdraft facility of GBP30.0m
together with a mortgage loan of GBP0.8m (30 June 10: GBP1.0m). The
overdraft facility is reviewed annually and this is next scheduled
for review on or after 30 September 2012. At 30 June 2011, the net
overdraft was GBP21.2m (30 June 10: GBP18.3m). The mortgage loan is
secured over freehold property.
The committed overdraft available for drawdown is limited to 80%
of trade receivables which are less than 240 days old.
The borrowing facilities are subject to financial covenants as
follows:
1. Interest cover ratio
A minimum cover ratio of PBIT to interest of 3, tested monthly
and on a rolling annual basis. Interest cover for the year ended 30
June 2011 was 6 (2009/10: 7).
2. Mortgage loan to property value
A maximum loan to property value of 70% must be maintained. At
30 June 2011, the loan to property value was 40% (30 June 10:
49%).
3. Achievement of internal forecasts for adjusted profit
The Group submits annual budgets and periodic re-forecasts to
Yorkshire Bank. The covenant requires the Group to operate above
85% of budgeted or re-forecast adjusted profit on a year to date
basis. The Group met this covenant at 30 June 2011.
Capital Management
The Group's objective is to maintain a balance sheet structure
that is efficient in terms of providing long term returns to
shareholders and safeguards the Group's financial position through
economic cycles.
The Group's business model allows for the procurement of
services required to service claims without owning a vehicle fleet
and infra-structure or repair businesses. Its capital structure is
geared towards funding working capital and fixed asset
investment.
The Group can choose to adjust its capital structure by varying
the scale and mix of its trading activities to reduce the
requirement to fund trade debtors. The Board believes that it would
be able to convert tranches of trade debtors into cash by agreement
with insurance company debtors, although there is likely to be a
cost in the form of discount. It can also choose to vary the amount
it pays by way of dividend to shareholders, by issuing new shares
or adjusting the level of capital expenditure.
Liquidity and Funding
The Group has sufficient funding to meet its normal funding
requirements in the medium term to fund its business plan.
Covenants attached to those facilities are not restrictive to the
Group's operations.
David B Sandhu
Chief Executive Officer
Peter J Harrison
Chief Financial Officer
26 September 2011
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2011
2010/11 2009/10
Note GBP'000 GBP'000
Revenue 117,621 91,929
Cost of sales (95,902) (75,265)
Gross profit 21,719 16,664
Administrative expenses (17,163) (13,600)
Operating profit 4,556 3,064
Financial expenses (819) (434)
Profit before taxation 3,737 2,630
Income tax (1,084) (708)
Profit for the period 2,653 1,922
Profit and total comprehensive
income for the period 2,653 1,922
Basic earnings per ordinary 1 4.34p 3.14p
share
Diluted earnings per ordinary 1 4.21p 3.11p
share
All income arises from continuing operations.
There are no items to be recognised in a separate consolidated
statement of comprehensive income and, accordingly, this statement
has been combined with the consolidated statement of income in
these financial statements.
The profit and total comprehensive income for the period is
fully attributable to the equity holders of the parent.
Consolidated Statement of Financial Position
as at 30 June 2011
30 June 30 June
11 10
Note GBP'000 GBP'000
Assets
Non-current assets
Goodwill 6,726 6,726
Other intangible assets 3,860 3,530
Property, plant and
equipment 2,196 2,463
Deferred tax asset 128 111
12,910 12,830
Current assets
Trade and other receivables 63,682 55,998
Cash at bank and in
hand 2 57 183
63,739 56,181
Total assets 76,649 69,011
Liabilities
Current liabilities
Interest bearing loans
and borrowings 2 (21,506) (18,582)
Trade and other payables (35,282) (32,646)
Income tax liability (533) (479)
(57,321) (51,707)
Non-current liabilities
Interest bearing loans
and borrowings (871) (1,001)
Total liabilities (58,192) (52,708)
Total assets less total
liabilities 18,457 16,303
Shareholders' equity
Share capital 6,142 6,142
Share premium account 1,579 1,579
Other reserves 238 269
Retained earnings 10,626 8,341
Treasury shares (128) (28)
Total shareholders'
equity 18,457 16,303
These financial statements were approved by the Board of
Directors on 26 September 2011 and signed on its behalf by:
David B Sandhu Peter J Harrison
Director Director
Consolidated Statement of Cash Flow
for the year ended 30 June 2011
2010/11 2009/10
Note GBP'000 GBP'000
Cash flows from operating
activities
Profit for the period 2,653 1,922
Adjustments for:
Depreciation of property,
plant and equipment 544 453
Amortisation of other
intangibles 634 604
Share compensation charge 74 92
Cash settled share options (98) -
Share options exercise - 26
Financial expense 819 434
Taxation 1,084 708
Increase in trade and
other receivables (7,684) (24,687)
Increase in trade and
other payables 2,435 13,552
Interest paid (819) (434)
Taxation paid (994) (753)
Net cash outflow from
operating activities (1,352) (8,083)
Cash flows from investing
activities
Purchases of property,
plant and equipment (84) (154)
Purchases of other intangible
assets (964) (1,089)
Net cash outflow from
investing activities (1,048) (1,243)
Cash flows from financing
activities
Purchase of treasury shares (100) -
Repayment of borrowings (81) (216)
Finance lease principal
repayments (199) (93)
Dividends paid (227) (385)
Net cash outflow from
financing activities (607) (694)
Net decrease in cash and
cash equivalents (3,007) (10,020)
Cash and cash equivalents
at 1 July 2 (18,146) (8,126)
Cash and cash equivalents
at 30 June 2 (21,153) (18,146)
Consolidated Statement of Changes In Equity
for the year ended 30 June 2011
Share Share Other Treasury Retained
capital premium reserves shares earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2009 6,142 1,579 345 (54) 6,624 14,636
Profit and
total
comprehensive
income
for the year - - - - 1,922 1,922
Share based
payments - - (76) 26 168 118
Tax on items
charged to
equity - - - - 12 12
Dividends to
equity
holders - - - - (385) (385)
At 30 June
2010 6,142 1,579 269 (28) 8,341 16,303
Profit and
total
comprehensive
income for
the year - - - - 2,653 2,653
Share based
payments - - (31) - 8 (23)
Purchase of
treasury
shares - - - (100) - (100)
Tax on items
charged to
equity - - - - 52 52
Dividends to
equity
holders - - - - (428) (428)
At 30 June
2011 6,142 1,579 238 (128) 10,626 18,457
Notes to the Preliminary Announcement
1 Earnings per share
Basic Earnings Per Ordinary Share
The calculation of basic earnings per ordinary share at 30 June
2011 is based on the profit for the period attributable to equity
holders of the parent and a weighted average number of ordinary
shares outstanding during the year, calculated as follows:
2010/11 2009/10
Profit for the year attributable
to ordinary shareholders GBP2,653,000 GBP1,922,000
Weighted average number
of ordinary shares 61,165,454 61,151,965
Basic earnings per share 4.34p 3.14p
Diluted Earnings Per Ordinary Share
The calculation of diluted earnings per ordinary share at 30
June 2011 is based on the profit for the period attributable to
equity holders of the parent and a weighted average number of
ordinary shares outstanding during the year including share options
with a dilutive effect, calculated as follows:
2010/11 2009/10
Profit for the year attributable
to ordinary shareholders GBP2,653,000 GBP1,922,000
Weighted average number
of ordinary shares - diluted 63,055,833 61,709,295
Diluted earnings per share 4.21p 3.11p
Adjusted Basic Earnings Per Ordinary Share
The calculation of basic adjusted earnings per ordinary share at
30 June 2011 is based on the profit for the period attributable to
equity holders of the parent and a weighted average number of
ordinary shares outstanding during the year, calculated as
follows:
2010/11 2009/10
Profit for the year attributable
to ordinary shareholders GBP2,727,000 GBP2,014,000
Weighted average number
of ordinary shares 61,165,454 61,151,965
Adjusted basic earnings 4.46p 3.29p
per share
2 Cash & Cash Equivalents In the Consolidated Statement of
Cash Flow
2010/11 2009/10
Cash at bank & in hand 57 183
Bank overdrafts (A) (21,210) (18,329)
Cash & cash equivalents in the
consolidated statement of cash
flow (21,153) (18,146)
(A) included within "Current liabilities: Interest bearing loans
& borrowings"
3 Preliminary Announcement
This unaudited preliminary statement, which has been agreed with
the auditors, was approved by the Board of Directors on 26
September 2011. It is not the Company's statutory accounts within
the meaning of Section 434 of the Companies Act 2006. Copies of the
Group's audited statutory accounts for the year ended 30 June 2011
will be despatched shortly to shareholders. The auditors have not
yet reported on these accounts. Copies will also be available to
the public at the Company's registered office: Indemnity House, Sir
Frank Whittle Way, Blackpool Business Park, Blackpool FY4 2FB.
The statutory accounts for the year ended 30 June 2010 received
an unqualified audit report and did not contain statements under
Section 498(2) or Section 498(3) of the Companies Act 2006. The
statutory accounts for the year ended 30 June 2010 have been
delivered to the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGURWBUPGGCQ
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